Section 3 - Marketing Flashcards
Marketing
identifying customer wants and satisfying them profitably
customer
person/business/other organisation that buys goods/services from a business
customer loyalty
when existing customers continually buy products from the same business
customer relationships
communicating with customers to encourage them to become loyal to the business and its products
market share
percentage of total market sales held by one brand or business
consumer
buys good or services for personal use (not to re-sell)
mass market
where there is a very large number of sales of a product
niche market
small, usually specialised segment of a much larger market
market segment
identifiable sub-group of a whole market in which consumers have similar characterstics/preferences
market research
process of gathering, analysing, and interpreting information about a market
product-orientated
business’s main focus of activity is on the product itself
market-orientated
business carries out market research to find out consumer wants before a product is developed and produced
marketing budget
financial plan for the marking of a product/product range for some specified period of time
(specifies how much money is available to market the product or range so that the marketing department knows how much they can spend)
primary research
collection and collation of original data via direct contact with potential or existing customers (aka field research)
secondary research
uses information that has already been collected and is available for use by others (aka desk research)
questionnaire
set of questions answered for collecting data for market research
online surveys
requires the target sample to answer a series of questions over the internet (google forms)
interviews
asking individuals series of questions (often face to face or over the phone)
focus group
group of people who are representative of the target market and try out the product of the business
sample
group of people selected to respond to a market research exercise (like a questionnaire)
random sample
people are selected randomly as a source of information for market research
quota sample
people are selected on the basis of certain characteristics (age, gender, income) as a source of information for market research
marketing mix
all the activities which go into marketing a product or service (4 P’s)
USP
Unique Selling Point
(special feature of a product that differentiates it from the products of competitors
brand name
unique name of a product that distinguishes it from other brands
brand loyalty
when consumers keep buying the same brand again and again instead of choosing a competitor’s brand
brand image
image/identity given to a product which gives it a personality of its own and distinguishes it from its competitor’s brands
packaging
physical container/wrapping for a product
(used for promotion and selling appeal)
product life cycle
the stages a product will pass through
(from its introduction through its growth until it is mature, and then finally its decline)
extension strategy
way of keeping a product at the maturity stage of the life cycle and extending the cycle
cost-plus pricing
cost of manufacturing the product plus a profit mark-up
competitive pricing
product is priced in line with or just below competitors’ prices to try to capture more of the market
penetration pricing
when price is set lower than the competitors’ prices in order to be able to enter a new market
price skimming
where a high price is set for a new product on the market
promotional prcing
when a product is sold at a very low price for a short period of time
dynamic pricing
businesses change product prices (usually when selling online) depending on the level of demand
price elastic demand
where consumers are very sensitive to changes in price
price inelastic demand
where consumers are not sensitive to changes in price
distribution channel
product being passed from the place of production to the customer
agent
independent person/business that is appointed to deal with the sales and distribution of a product or range of products
promotion
where marketing activities aim to raise customer awareness of a product/brand, generating sales and helping to create brand loyalty
advertising
paying for communication with potential customers about a product to encourage them to buy it
informative advertising
emphasis of advertising/sales promotion is to give full information about the product
persuasive advertising
advertising/promotion which is trying to persuade the consumer that they really need the product and should buy it
target audience
people who are potential buyers of a product/service
sales promotions
incentives
(special offers/deal aimed at consumers to achieve short-term increases in sales)
what are 5 market changes
-consumer tastes
-fashion change
-changes in technology
-changes n incomes
-ageing populations
4 ways businesses respond to market changes (and increased competition)?
-maintain good customer relationships
-keep improving its existing product
-bring out new products (to keep customers’ interest)
-keep costs low to maintain competitiveness
advantages of mass marketing
-total sales are high
-if one product fails, there are other products that may be successful
-oppurtunies for the business to grow due to large potential sales
disadvantages of mass marketing
-high levels of competition (from other similar businesses)
-high costs of advertising and promotion
-product/service may not meet the need of customers so sales may be lost
advantages of niche marketing
small business may sell successfully and competition from larger businesses (focusing on mass marketing) can decrease
-needs of consumers can be more closely focused on (more specific target) (lead to consumer loyalty and good customer relations)
disadvantages of niche marketing
-usually small and have limited sales potential
-doesn’t help business grow
-if the business fails, the product selling will fail but there won’t be other products to cover up the loss
6 ways to segment a market
-socio-economic group
-age
-region/location
-gender
-use of the product
-lifestyle
advantages of primary research?
-up to date
-relevant to the business doing it
-carried out by the people who want to use the data
-first-hand
-most effective to gather specific information (to solve a specific problem)
-not available to other businesses (unless they do primary research)
disadvantages of primary research?
-expensive (money and time)
-not available immediately (takes time to collect information)
advantages of questionnaires
-detailed information can be gathered about product/service
-customers’ opinions can be gained
-can be online
disadvantages of questionnaires
-answers may not be accurate depending on the quality of the question (misleading?)
-expensive (money and time)
-collating and analyzing results is time-consuming
advantages of online surveys
-fast
-cheaper than other types
-easy for participant to complete
-data collected can be analysing using IT tools
disadvantages of online surveys
-no interviewer to explain questions or gain more detail information (follow-up questions)
-can’t get to some people who don’t have access to the internet
-scope for fraud (answers may not be honest, could be done carelessly)
advantages of interviews
-can explain questions to the interviewee if there is a problem (not understanding part)
-detailed (and more) information can be gathered (specifics)
disadvantages of interviews
-interview could manipulate consciously or unconsciously
-time consuming
-expensive
advantages of focus groups
-provide detailed information about consumers’ tastes/preferences
-interaction between the group members can help business understand people’s opinions better
-quicker (than indivisual interviews)
-cheaper (than indivisual interviews)
disadvantages of focus groups
-time consuming
-expensive
-discussion could be influenced by others’ opinions (not personal, true opinion)
-domation could happen
advantages of secondary research
-cheaper than primary research
-obtain information that can’t be gained using primary research (population)
-quicker than primary research
disadvantages of secondary research
-data may be out of date
-data is available to all businesses so competitors may get it
-data may not be relevant as another business had to do primary research to gain this information (biased)
what are 4 internal sources of secondary data
-sales department records, pricing data, customer record, sales reports
-opinions of distribution and public relations personnel
-finance department
-customer service department
what are 4 externals sources of secondary data
-government statistics
-newspapers
-trade association
-market research agencies
-online sources
What are the 4 p’s of the marketing mix
-price
-place
-promotion
-product
what are the 4 types of goods
-consumers goods
-consumer services
-producer goods
-producer services
what are the 6 stages of product development?
1) Generate ideas
2) further research
3) decide if the company will be able to sell enough
4) develop a prototype
5) test the market
6) full launch
advantages of USP
-business will be first in the market
-diversification for business to grow
-businesses can expand into new markets
-businesses can expand into existing markets
disadvantages of USP
-expensive (market research cost, analysing the findings research, producing trial products, including cost of wasted materials)
-lack of sales if the target market is wrong
-loss of company image if the new product to meet customer needs
what are the 6 steps of the product life cycle?
1) developed
2) introduced
3) grow
4) maturity
5) saturation point
6) decline
what are 6 ways to extend the product life cycle?
-introducing new variations of the original product (child version)
-sell into new markets (export to another country)
-make small changes to the product’s design, colour and packaging
-use new advertising campaign
-introducing a new improved version of the old product
-sell through additional different retail outlets
what are 4 reasons a business can adopt new pricing strategies
-try to break into a new market
-try to increase its market share
-try to increase its profits
-try to make sure all its costs are covered and a target profit is earned
advantages of cost-plus pricing
-easy to apply
-different profit mark-ups can be used in different markets
-each product earns a profit for the business
disadvantages of cost-plus pricing
-could lose sales of competitors’ prices decrease
-total profit is only made if sufficient units of the product are sold
-no incentive to reduce costs (any increase in costs is just passed on to the customer as a higher price)
advantages of competitive pricing
-Sales are likely to be high as the price is a realistic level (not over or under priced)
-Avoids price competition (reduces profits for all businesses in the industry)
-Often used when its hard for consumers to tell the difference between the product of different businesses
disadvantages of competitive pricing
-If cost of production is higher than competitors, price could be more leading to losses
-Higher quality product might be sold at a more expensive price than competitors
-detailed research is needed for the decision of the price, and the research costs time and money
advantages of penetration pricing
.
disadvantages of penetration pricing
advantages of price skimming
disadvantages of price skimming
advantages of promotional pricing
disadvantages of promotional pricing
what are the 6 aims of promotion?
what are the 5 steps of the advertising process
10 types of advertising media?
what are the 9 types of sales promotion?
advantages of sales promotion
