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Business studies > section 3 > Flashcards

section 3 Flashcards

1
Q

What is marketing?

A

identifying customer wants and satisfying them profitably

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2
Q

role of marketing

A

identifying customer needs
satisfying customer needs
maintaining Customer loyalty
gaining information about customers

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3
Q

customer

A

person business or other organisation which buys good or services from a business

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4
Q

customer loyalty

A

when exist customers continually buy products from the same business

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5
Q

customer relationships

A

communicating with customers to encourage them to become loyal to the business and its products

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6
Q

Market share

A

the percentage of total market sales held. by one brand or business

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7
Q

Why customer spending patterns may change

A

change in their tastes and preferences
change in technology: as new technology becomes available, the old versions of products become outdated and people want more sophisticated features on products

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8
Q

consumer

A

buys goods or services for personal use not to resell

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9
Q

Why have some markets become more competitive

A

Globalization
Improvement in transportation infrastructures
Internet/E-Commerce

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10
Q

How can business respond to changing spending patterns and increased competition

A

maintaining good customer relationships

keep improving its existing products, so that sales is maintained
introduce new products to keep customers coming back - away from competitors products

keep costs low to maintain profitability - low cost means more customers buying

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11
Q

Niche Market

A

small usually specialised segment of a much larger market

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12
Q

mass market

A

where is a large number of sales of a product and there is no attempt to target groups with in it

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13
Q

niche market advantages
disadvantages

A

Small firms can thrive in niche markets where large forms have not yet been established
If there are no or very few competitors, firms can sell products at a high price and gain high profit margins because customers will be willing be willing to pay more for exclusive products

Lack of economies of scale (can’t benefit from the lower costs that arise from a larger operations/market)
Risk of over-dependence on a single product or market: if the demand for the product falls, the firm won’t have a mass product they can fall back on
Likely to attract competition if successful

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14
Q

mass market advantages
disadvantages

A

Larger amount of sales when compared to a niche market
Can benefit from economies of scale: a large volume of products are produced and so the average costs will be low when compared to a niche market

They will have to face more competition
Can’t charge a higher price than competition because they’re all selling similar products

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15
Q

Market Segmentation

A

A market segment is an identifiable sub-group of a larger market in which consumers have similar characteristics and preferences

Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics.

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16
Q

ways of segmenting a market

A

socio economic group
by age
region location
gender
use of the product
lifestyle

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17
Q

Advantages of market segmentation

A

Makes marketing cost-effective, as it only targets a specific segment and meets their needs.
The above leads to higher sales and profitability
Increased opportunities to increase sales

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18
Q

Market research

A

process of collecting, analysing and interpreting information about a product

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19
Q

Product-oriented business

A

firms produce the product first and then tries to find a market for it. Their concentration is on the product – its quality and price

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20
Q

Market-oriented businesses

A

such firms will conduct market research to see what consumers want and then produce goods and services to satisfy them. They will set a marketing budget and undertake the different methods of researching consumer tastes and spending patterns, as well as market conditions

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21
Q

Primary Market Research

A

collection and collation of original data via direct contact with potential or existing customers

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22
Q

secondary market research

A

uses information that has already been collected and is available for use by others

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23
Q

Sample

A

subset of a population that is used to represent the entire group as a whole

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24
Q

random sampling

A

occurs when people are selected at random for research

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25
Q

quota sampling

A

when people are selected on the basis of certain characteristics (age, gender, location etc.) for research

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26
Q

Methods of primary research

A

Questionnaires
Online surveys
interviews
focus groups

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27
Q

Secondary Market Research internal and external

A

ext- Government statistics
Newspapers
Trade associations
Market research agencies
internet

int- Sales department’s sales records, pricing data, customer records, sales reports
Opinions of distributors and public relations officers
Finance department
Customer Services department

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28
Q

Marketing mix

A

4 p’s- Product, Price, Promotion and Place
the combination of things that a company decides to try in order to persuade people to buy a product

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29
Q

Product

A

the good or service being produced and sold in the market

30
Q

Types of products

A

consumer goods, consumer services, producer goods, producer services

31
Q

What makes a successful product?

A

It satisfies existing needs and wants of the customers

It is able to stimulate new wants from the consumers

Its design – performance, reliability, quality etc. should all be consistent with the product’s brand image

It is distinctive from its competitors and stands out

It is not too expensive to produce, and the price will be able to cover the costs

32
Q

Advantages of developing a new product

A
  • can create a unique selling point
  • diversification of business
  • allows business to expand into existing markets
  • Helps spreads risks because having more products mean that even if one fails, the other will keep generating a profit for the company
33
Q

disadvantages of developing a new product

A

Market research is expensive and time consuming

Investment can be very expensive

34
Q

Why is brand image important?

A

Consumers recognize the firm’s product more easily- helps differentiate the company’s product from another.

Their product can be charged higher than less well-known brands – if there is an established high brand image, then it is easier to charge high prices because customers will buy it nonetheless.

Easier to launch new products into the market if the brand image is already established.

35
Q

what is brand image

A

Brand image is an identity given to a product that differentiates it from competitors’ products.

36
Q

what is brand loyalty

A

the tendency of customers to keep buying the same brand continuously instead of switching over to competitors’ products

37
Q

Why is packaging important?

A

It protects the product

It provide information about the product (its ingredients, price, manufacturing and expiry dates etc.)

To help consumers recognise the product (the brand name and logo on the packaging will help identify what product it is)

It keeps the product fresh

38
Q

stages of PLC

A

development
introduction
growth
maturity
saturation
decline

39
Q

definition of extension strategies

A

marketing techniques used to extend the maturity stage of a product (to keep the product in the market)

40
Q

Extension strategies

A

only in terms of the product

Finding new markets for the product
Finding new uses for the product
Redesigning the product or the packaging to improve its appeal to consumers
Increasing advertising and other promotional activities

41
Q

Cost plus pricing
ADV
DISADV

A

cost of manufacturing a product plus a profit markup - to recover costs and ensure a certain profit is made

Quick and easy to work out the price
Makes sure that the price covers all of the costs

Price might be set higher than competitors or more than customers aren’t willing to pay, which reduces sales and profits

42
Q

Competitive pricing
ADV
DISADV

A

Setting a price similar to that of competitors’ products which are already available in the market - to maintain market share and to increase sales

sales are likely to be high because the price is good - not too high not too low
avoids price competition

higher quality product may need to be sold at at a price above competitors prices to give it a higher quality image

43
Q

Penetration pricing
ADV
DISADV

A

when the price is set lower than competitors In order to enter a new market - to enter new markets

Attracts customers more quickly
Can increase market share quickly

Low revenue due to lower prices
Cannot recover development costs quickly

44
Q

Price skimming
ADV
DISADV

A

Where a high price is set for a new product on the market - to make high profit and recoup R&D costs

can help to establish the product as being of good quality
high R&D cost can be easily recovered from profit

high price may discourage some potential customers from buying it
It may backfire if competitors produce similar products at a lower price

45
Q

promotional pricing
ADV
DISADV

A

when a product is sold at a very low price for a short period of time - to increase sales

Helps to sell off unwanted stock before it becomes out of date
A good way of increasing short term sales and market share

Revenue on each item is lower so profits may also be lower
might lead to a price competition with competitors

46
Q

dynamic pricing

A

when businesses change product prices, usually when selling online, depending on the level of demand.

47
Q

price elastic demand

A

where consumers are very sensitive to change in price

48
Q

price inelastic demand

A

where consumers are not sensitive to changes in price

49
Q

Manufacturer to Consumer
ADV
DISADV

A

The product is sold to the consumer straight from the manufacturer.

– All of the profit is earned by the producer
– The producer controls all parts of the marketing mix
– Quickest method of getting the product to the consumer

– Delivery costs may be high if there are customers over a wide area
– All storage costs must be paid for by the producer
– All promotional activities must be carried out and financed by the producer

50
Q

Manufacturer to Retailer to Consumer
ADV
DISADV

A

The manufacturer will sell its products to a retailer who will then sell them to customers who visit the shop.

– The cost of holding inventories of the product is paid by the retailer
– The retailer will pay for advertising and other promotional activities
– Retailers are more conveniently located for consumers

– The retailer takes some of the profit away from the producer
– The producer loses some control of the marketing mix
– The producer must pay for delivery of products to the retailers
– Retailers usually sell competitors’ products as well

51
Q

Manufacturer to Wholesaler to Retailer to Consumer
ADV
DISADV

A

The manufacturer will sell large volumes of its products to a wholesaler. Retailer will buy small quantities of the product from the wholesaler and sell it to the consumers.

– Wholesalers will advertise and promote the product to retailers
– Wholesalers pay for transport and storage costs

– Another middleman is added so more profit is taken away from the producer
– The producer loses even more control of the marketing mix

52
Q

Manufacturer
to Agent
to Wholesaler
to Retailer
to Consumer

ADV
DISADV

A

The manufacturer will sell their products to an agent who has specialized information about the market and will know the best wholesalers to sell them to. This is common when firms are exporting their products to a foreign country. They will need a knowledgeable agent to take care of the products’ distribution in another country

– The agent has specialised knowledge of the market and will be aware of local conditions and will be in the best position to select the most effective places in which to sell

– Another middleman is added so even more profit is taken away from the producer

53
Q

What affects place decisions?

A

The type of product it is
The technicality of the product
How often the product is purchased
The price of the product

54
Q

promotion

A

marketing activities used to communicate with customers and potential customers to inform and persuade them to buy a business’s products.

55
Q

Aims of promotion

A

Inform customers about a new product
Persuade customers to buy the product
Create a brand image
Increase sales and market share

56
Q

Types of promotion

A

Advertising
Sales Promotion: using techniques such as ‘buy one get one free’
Personal selling: sales staff communicate directly with consumer
Direct mail
Sponsorship

57
Q

What affects promotional decisions?

A

Stage of product on the PLC
The nature of the product
The nature of the target market
Cost-effectiveness

58
Q

social media marketing

A

is a form of internet marketing that involves creating and sharing content on other social media networks in order to achieve marketing and branding goals. it includes activities such as posting text and image updates, videos, and other content that achieves audience engagement, as well as paid social media advertising.

59
Q

viral marketing

A

when consumers are encourages to share information online about the products of a business

60
Q

e commerce

A

the online buying and selling of goods and services using computer systems linked to the internet and apps on mobile phones

61
Q

advantages and disadvantages of advertising on social media

A

target customers will see advert when they go on social media
cheap to use
speed in response to market changes
reaches groups that are difficult to reach in a different way

can alienate customers if they find adverts annoying
businesses have to pay for advertising using pop ups
potential customers may not use social media

62
Q

advantages and disadvantages of a business using their own website

A

no extra cost if the website is already set up
can change adverts, pictures, posts etc more quickly
interactive adverts can be more attractive

relies on customer finding the website
design cost of the website may be high
potential customers may not see the website as the page may come up in a long list of results when using a search engine like google

63
Q

opportunities of e commerce to business

A

websites can be used to promote the company and its products worldwide much more cheaply than other forms of marketing

orders can be taken over the internet and sent directly to the company warehouse for dispatch

64
Q

opportunities of e commerce to consumers

A

payment by credit or debit card is very easy

no need to leave the house to go shopping

comparisons between price and products or services offered can be easily made by surfing from one website to another

65
Q

threats of e commerce to business

A

high competition

website design has to be clear and attractive - this can be expensive and often needs to be updated which can lead to high costs

no face to face contact with consumers so business does not gain useful market research feedback

66
Q

threats of e commerce to consumers

A

products can’t be touch seen felt or tried on

consumers still need access to the internet

consumers concerned about theft and fraud

67
Q

marketing strategy

A

is a plan to combine the right combination of the four elements of the marketing mix for a product to achieve its marketing objectives

68
Q

Legal Controls on Marketing

A

laws that protect consumers from being sold faulty and dangerous goods

laws that prevent the firms from using misleading information in advertising

laws that protect consumers from being exploited in industries where there is little or no competition, known as monopolising.

69
Q

opportunities of Entering New Markets

Problems of entering foreign markets

A

-increase sales, revenue and profits
-the business is now available to a wider group of people, which increases potential customers

lack of knowledge
cultural differences
exchange rate differences
import restrictions
language restrictions

70
Q

How to overcome problems of entering foreign markets

A

Joint venture: an agreement between two or more businesses to work together on a project

international franchising

licensing

Business studies (7 decks)

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