PPQ marketing Flashcards
Describe what is meant by market share. (1) S 1a
Market share is an organisation’s percentage of the overall sales in a particular market.
Compare the use of random sampling and quota sampling when carrying out market research. (2) 2015 2c
Random sampling is when respondents are picked randomly whereas quota is picked from a group of people with specific characteristics
Random uses pre-selected respondents who must be interviewed whereas Quota allows researcher to find respondents who fit the characteristics required
Random is expensive to carry out because specific respondents must be interviewed and contacted until they are available whereas Quota is less expensive as the interviewer simply needs to find suitable respondents
Random sampling reduces biased results because of method of selection of respondents but bias can occur with quota sampling as the interviewer decides who to question
Describe the ways Ryanair could measure the success of its decision to improve customer satisfaction (4) 2017 1f
Conduct field research
Gather feedback from staff
Compare passenger figures
Compare revenue figures
Compare profit figures
Compare using ratio analysis
Review the number of complaints
Compare share price
Compare market share
Evaluate external media and journalism reports, such as the Which? website, TripAdvisor etc
Discuss the methods of market research. (5) 2018 4a
Discuss the methods of market research. (5) 2018 4a
Focus Groups
Detailed feedback can be given to the organisation.
Participants are more likely to give better feedback as they have agreed to take part.
Qualitative information can be difficult to analyse.
Personal Interviews
Interviews allow the organisation to directly gain the views of customers.
Can clarify any questions to aid understanding.
It can be time consuming to carry out the interview.
Respondents may lie to get through the interview quickly.
Telephone Survey
Telephone surveys mean instant feedback can be given.
Sometimes gains a hostile response from the person being called.
Postal Survey
Postal survey can be sent out to all customers (wide geographical area).
Can target customers in selected areas.
Customers can compete the survey at a time that suits them.
Low response rate as often viewed as ‘junk mail’.
Cannot ask for clarification.
Hall Test
Relatively inexpensive to carry out.
Feedback can be gathered instantly.
As customer is giving feedback directly, they may not want to give a negative response.
Observation
Can provide accurate quantitative information.
Customers will act naturally as they do not know they are getting watched.
There is no direct contact with customers to ask about their actions.
Test Marketing
Once feedback is received changes can be made to the product prior to launch.
Not representative of the wider market as only a small area gets to test the product.
Social Networking Websites
Can gather large amounts of information quickly.
Can only gather information from those who use social media.
Comments are ‘public’ so anyone can read reviews including competitors.
Internet
Customers can be surveyed across a wide geographical area
Software enables easy analysis of the results
Access to the internet must be available
Consumer audit
Customer trends can be identified
Customers are paid so this can be an expensive method
EPOS
Gathers information about consumer behaviour eg what is bought, how they react to changes in price or promotions
Promotions can be tailored to the individual customer
Expensive to set up
If money-off vouchers are offered, it may lower profits
Newspapers
Easily accessible as the information already exists
May be biased
Has been gathered for an alternative purpose
Compare field research with desk research
field research = gathering new information, appropriate to what is being researched.
May take time to prepare, carry out and research.
Desk research = analysing information that already exists, may not be specific to information wanted / may involve filtering out information that is not appropriate.
Less time to gather
Describe the benefits of maintaining a product portfolio. (4) S 4a
Allows organisation to spread risk (1 mark). If one product’s sales decline, another product’s sales could be growing (1 development mark).
The opportunity for increased sales/profits from selling different products (1 mark) due to customers having a number of products to buy from one brand (1 development mark).
Seasonal fluctuations can be evened out (1 mark) — the company may not struggle as much if they have products that are popular at certain times of year (1 development mark).
They can meet the needs of different market segments.
Newer products at growth stage can replace those at the decline stage of the product life cycle.
Reference to analysis of Boston Matrix — resources can be allocated from poorer performing products (‘dogs’) to income-generating products (‘stars’ or ‘cash cows’).
Describe the advantages to Google of having a varied product portfolio as shown in Exhibit 2. (5) 2015 1b
Allows organisation to spread risk over different markets
Can meet the needs of different market segments
‘Cash cows’ can fund other, riskier, ventures
‘Stars’ can allow a business to be a market leader
‘Problem Child’ products give businesses opportunity to invest
‘Dogs’ should be divested
Increased profits can arise from selling different products
Newer products can replace those at the end of the life cycle
A range of products increases brand awareness
Easier to launch new products with large existing portfolio
Compare the use of penetration pricing with skimming pricing. (3) S 4b
Penetration pricing is used in a highly competitive market, whereas skimming pricing is used in a market with little or no competition.
Penetration pricing means that the product will be introduced at a low price, whereas skimming pricing means that the product is introduced at a high price.
With penetration pricing the price will be increased once the product has been established, whereas with skimming pricing the price is decreased as competition enters the market.
Penetration pricing is used to entice consumers to switch from other brands, whereas skimming pricing is used when the product is new or unique.
Both penetration and skimming pricing are short-term pricing strategies.
Both penetration and skimming pricing are used when introducing new products to the market.
Describe 2 suitable pricing strategies for Mackie’s luxury ice cream produce.
Premium Pricing
A high price is set
Can give an impression of quality/exclusive image
Competitive Pricing
Price is set similar to competitors
Requires effective promotion/advertising
Market Skimming
Price is initially set high but will lower over time
Customers may want to try the product when it is introduced
High profit margins during the introduction stage help recover costs
Over time the price decreases
Effective for new product launches with few competitors
Penetration Pricing
May be used to launch ice cream into a new market
A low price is initially set
With more sales over time the price will increase
Promotional Pricing
Vouchers/offers/discounts are used to encourage customers to buy
Price may be lowered for a period of time
Used to quickly sell stock and aid cash flow
Loss Leader…
Destroyer Pricing…
Psychological pricing…
Cost-plus Pricing…
Describe into the pipeline promotions that an organisation could use. (3) S 4c
These are promotions that a manufacturer gives to the wholesaler or retailer that sells their products (definition).
Dealer loaders are one example of ‘into the pipeline promotion’: this involves the wholesaler/retailer receiving an extra amount free, eg five boxes for the price of four.
The manufacturer may also provide the wholesaler/retailer with staff training.
The manufacturer may provide the wholesaler/retailer with point of-sale displays.
The manufacturer could allow sale-or-return.
Describe the sales promotions which could be used when launching a new product. (4)
Free samples to try
Free entry to competitions
Demonstrations of products - let customers see/try new product before buying
Credit facilities allow customers to buy and pay back over a period of time
Free gift with purchase of the new product
BOGOF – buy new product, get another item free
Free delivery with purchase
Offering discounts/promotional pricing
Discuss the “out of the pipeline” methods of promotion identified in the case study. (4) 2016 1aii
Special offers/Save £1/Discount
Price can be lowered for a period of time
Useful promotion method for shifting stock
Encourages new customers to purchase
Retain loyal customers
Can lower potential profit margin
Customers feel they are getting value for money
Competitions
Customers have a chance of winning through purchasing a product
May incur additional marketing costs
Can gather marking details from customers eg e-mail, phone number etc
Encourages repeat custom to increase the chance of winning
Describe the methods Ryanair’s public relations department may use to improve the company’s image (5) 2017 1d
Write a press release
Hold a press conference
Host an open day
Sponsor an event
Use of celebrity endorsement
Partner with charities/social enterprises to support their cause
Allow staff paid days to volunteer at the charity
Donations to charities
Promote ethical operations eg change to bio-fuel over crude oil jet fuel
Give away free goods/merchandise in the flight eg complimentary drinks
Employ a Public Relations (PR) Manager
Rebrand an improved image for Ryanair
Manage the social media forums ie handle complaints effectively
Describe the role of public relations (PR) in an organisation. (3)
Building awareness/creating a positive image for an organisation.
Generating press releases.
Organising press conferences/managing bad press.
Organising sponsorship.
Promoting CSR.
Donating to charity
Discuss the factors an organisation might consider before selecting a channel of distribution. (4)
Type of Product – suitable transportation/storage for type of product; product durability eg electrical, frozen food, flowers, liquid, livestock
Finance available – if finance is limited this may affect the choice of channel selected
Image of Product – channel should reflect the quality of the product eg high quality distributed through exclusive, up-market retailers
Legal restrictions – some products can only be sold in certain ways/places eg cigarettes/alcohol/medicines
Where the product is in its life cycle – as it progresses through growth to maturity it needs to be more available to the market
Distribution capability of the organisation – do they have transport or does it need to be outsourced
Technical products – if highly technical it may need to be demonstrated through direct sales
Describe the following elements of the extended marketing mix: * people * process * physical evidence. (6)
People
any member of staff who comes into contact with the customer
the organisation needs to create a culture of good customer care
the organisation may need to create customer service policies
staff are trained in customer care
motivated staff are required
good after-sales service and advice should be available
Process
the systems and procedures that deliver a product or service
the experience the customer has when making a purchase
the impression left on the customer
the organisation must be able to handle complaints
contingency planning could be put in place
short waiting times
user-friendly internet experience
quality of information given to customers
Physical evidence
the physical environment experienced by the customer
the layout and design of the premises
the ambience of the premises
the cleanliness of the premises
must reflect customer expectations.
Explain the advantages to an organisation of using a smartphone application (app) to promote products (3)
The application can be accessed anywhere as long as there is a mobile Internet signal - which means organisations can contact customers
Operates 24/7 so can promote at all times – reaching more people
Allows customers worldwide to be targeted - giving the organisation a broader customer base
Information about products and offers can be updated quickly - keeping customers informed
Thus giving the organisation a good channel of communication
Photographs and video demonstrations can be uploaded to the app - highlighting benefits of the product o Increasing chance of sales
Discuss the costs and benefits to Police Scotland of marketing through its social media network. (4)
Costs
only available to citizens with a social media account
negative comments are public
so can affect Police Scotland’s image
account may be susceptible to hacking, fraud or viruses
requires constant monitoring and updating
which can be labour intensive
Benefits
access to a huge number of citizens who use social media
increase public awareness of Police Scotland’s work
cheaper advertising platform than traditional methods, for example TV/radio etc
adverts may be targeted to citizens based on internet history
post can be shared making them viral
video, animation and images can be used in posts
Distinguish between product led and market led organisations (2
Product led is when an organisation produces a product first and then tries to sell it to customers whereas a market led focuses on customer wants and produces a product to satisfy them
Very little market research is carried out with product led but in market led there is a lot of market research carried out before production starts
In product led the organisation focuses on product testing but in market led the organisation focuses on market testing
Distinguish between product orientation and market orientation (2)
Product orientation produces a product and then attempts to sell it whereas market orientation produces a product that consumers want/need
Product orientation does not conduct any market research whereas market research is central to market orientation
Product orientation focuses on product research/testing whereas market orientation focuses on customer needs
Market orientation is more able than product orientation to meet consumers changes in fashion/tastes
Product oriented products have little competition in comparison to market orientation
Describe the various means of sampling that could be used to obtain a cross section of views when carrying out market research (4)
Random Sampling − individuals are pre-selected at random and an interviewer makes calls to those people from the list.
Lists can come from the electoral register or telephone directory.
Can be difficult to carry out as once the people are selected they must be interviewed.
This means the interviewer must continually try to contact the person.
Quota Sampling − instructions are given as to the number of people to interview and in what characteristic they should be from, ie, married or single, each different income group.
The researcher must then find the correct number of people in each category.
It is cheaper than random sampling.
Stratified Sampling − the sample is divided up into segments based on how the population as a whole is divided up.
This makes a random sample more representative of the population as a whole.
For example, income groupings will be divided up closely to match the national percentages of each income group.
Describe 4 methods of field research (8)
Personal interview: face-to-face interview that can be held in the street or at a persons home.
Focus group: selected individuals are involved in discussions about an organisations product or service.
Telephone survey: individuals are telephoned at their home and asked specific questions.
Postal survey: questionnaires are sent through the post to selected individuals.
Consumer audit: continuous market research is carried out with a selected group of consumers who record their purchases in a diary which is then analysed.
Hall test: individuals are invited to try out a product and then give their opinion on it.
Observation: customers actions and purchasing patterns are observed by trained staff.
EPOS: used to gain an insight into what products are selling in each store.
Test Marketing: product is launched on a small area to gauge the consumers response. (8)
Describe 3 market research techniques that an organisation could use to assess customer satisfaction (3)
Telephone surveys are used by organisations to call customers and gain their views.
Postal survey where questionnaires are posted out to customers who complete them and return them to the organisations.
Personal interview where people are stopped in the street and asked questions.
Secondary information such as statistics on the number of subscribers to satellite TV.
Online survey.
Interactive surveys.
Focus group.
Hall test.
Justify 3 market research techniques that an organisation could use to assess customer satisfaction (A different justification should be used each time (6)
Telephone surveys - Instant feedback can be given.
Postal survey - Could send these out to all customers, or customers in selected areas, gaining their opinions.
Personal interview - Can clarify any questions to aid understanding. Allows 2 way communication.
Secondary information - Easily accessible. (Max 1 for secondary information.)
Online survey.
Interactive surveys.
Focus group.
Hall test.
Distinguish between quota sampling and random sampling (2)
Quota sampling is when an interviewer is left to find the people who fit certain categories whereas random sampling pre- selected individuals, these individuals must be interviewed.
Random sampling is an expensive technique to carry out whereas quota sampling is less expensive as the interviewer can use their judgement to find people to interview
Random sampling limits the amount of bias that can occur whereas interviewer bias can occur in quota sampling due to being able to choose who to interview
Discuss market research techniques used by an organisation (6)
Street surveys allow the organisation to directly gain the views of customers
Can clarify any questions to aid understanding
Allows 2 way communication
Very expensive method in comparison to others
Specific target segments can be targeted, e.g. children, females
Telephone surveys mean instant feedback can be given
Sometimes gains a hostile response from the person called
Postal survey can be sent out to all customers (wide geographical area)
or customers in selected areas (target area)
low response rate
Secondary information is easily accessible
More cost effective
Focus group
Hall test
Test market
Discuss the use of 3 field research techniques. (6)
Personal Interview
Allows 2 way communication and encourages answers
Misunderstandings can be ironed out
Can be an expensive method
Home interviews tend to be unpopular with consumers
Telephone Survey
Is fairly cheap
Response is immediate allowing large numbers to be surveyed quickly
Hostility to the person making the call is common as people do not like being disturbed at home
Postal Survey
Is cheaper method than street survey as it does not require trained personnel
Questions need to be very simple and easily understood
Response rate is very low
Free gifts are used to increase the return rates
High design costs
Wide range of views and opinions
Hall Test
Gives consumers the chance to see or try a product and to be questioned on their opinions of the product
Is often used in supermarkets and wholesalers
Fairly cheap method
Can be difficult to analyse qualitative information
Consumers often give favourable replies simply to be polite
Consumer Audit
Can be accurate information on consumer buying patterns which can be used to predict consumer trends
Is a very expensive method as many consumers receive payments to complete diaries
Consumers get fed up quickly resulting in a high turnover of respondents and inaccurate data
Consumers may not complete the journals accurately or on time
Test Marketing
Allows for the product to be amended or improved before national launch
Saves the cost of a national launch if the product does not receive good reviews in the test market
Regional tastes may not represent the nation as a whole
Observation
Provides accurate quantitative information
There is no direct contact with the customers
Cannot clarify any situations or ask for explanations
Customers provide organisations with personal information. Explain the ways in which organisations can use this to their advantage.(4)
To establish a database of existing or potential customers, to whom they can send information of relevant offers.
Information may be passed or sold to other companies.
Gives company information on their market segments allowing them to target specific markets so they can vary product to suit the needs of the market.
Differentiation of products possible.
Prevents products being promoted to people who are not interested – a waste of resources.
Information gathered in this way is more likely to be up-to-date – users will change information when online more readily than informing organisations by post/telephone.
When an order is placed, the organisation already has customer’s details – thus saving time ordering online – if the ordering process is speedier and easier, more customers may use it.
Max 1 mark for different forms of promotion
Describe the field research methods Santander UK plc may use to gather feedback from its customers so it can improve its service. (6)
Focus Groups
a range of opinions from a group of customers
qualitative information may be difficult to analyse
participants will require payment or to be reimbursed for their time
Personal Interview/Street Survey
often face-to-face questioning
provides instant clarification/feedback
shows body language/facial expressions which aids communication
Telephone Survey
may be done by cold calling and asking questions
may be perceived as an invasion of privacy/nuisance by customers
Social Media
gather information from customers who use social media and post comments
comments are ‘public’ so anyone can read reviews including competitors
Postal Survey
sent out to customers’ homes, filled-in and returned
can target areas with specific attributes eg high income households
may be perceived as junk mail which lowers the response rate
Online Survey/EPOS/Test Marketing/Observation/Hall Test…
Describe the benefits of holding a varied product portfolio (5)
Allows organisation to spread risk.
They can meet the needs of different market segments.
Increased profits from selling different products.
Newer products can replace those at the end of the life cycle.
Increases brand awareness
Easier to launch new products
Seasonal fluctuations
