Section 3 - Marketing Flashcards
what is the role of marketing
identify customer needs, satisfy customer needs, maintain customer loyalty, gain information about customers, anticipate changes in customer needs,
Market share
The percentage of total market sales held by one brand or business
What are the sections of the marketing department
The sales department, the market research department, the promotion department, the distribution department
Why do consumer/ customer spending patterns change
Consumer tastes and fashion change, changes in technology, change in incomes, aging populations
Why do markets become more competitive?
Globalisation, transportation inmprovements, internet/ e-commerce
How can businesses adapt to changing spending patterns and increase competition?
Maintain good customer relationships, keep improving on existing products, bring out new products to keep customers’ interest, keep costs low to maintain competitiveness
Mass market
Where these is a very large number of sales of a product
Niche market
small, usually specialised, segment of a much larger market
market segment
an identifiable sub-group of a whole market in which consumers have similar characteristics or preferences
Ways to segment a market
socio-economic group, age, region/location, gender, use of product, lifestyle
product orientated business
one whose main focus of activity is on the product itself
market-orientated business
one which carries out market research to find out consumer wants before a product is developed and produced
marketing budget
a financial plan for the marketing of a product or product range for some specified period of time. It specifies how much money is available to market the product or range, so that the Marketing Department know how much they may spend.
Why is market research needed?
a business can identify customer needs in a changing and competitive international environment. This is essential if a business is to remain competitive
market research
the process of gathering, analyzing and interpreting information about a market
primary research
the collection and collation of original data via direct contact with potential or existing customers. Also known as field research. You can use a questionnaire, interview, focus group or observation
secondary research
information that has already been collected and is available for use by others. Also known as desk research.
questionnaire
a set of questions to be answered as a means of collecting data for market research
+detailed qualitative information can be gathered about the product or service +customer opinions obtained +can be done online +link to prizes
-the question must be very clear -takes time and money -collating/ analysing is time consuming
Interviews
when interviews are used, the interviewer has ready prepare questions for the interviewee
+able to explain questions +detailed information
-the interviewer can give unconscious bias -time consuming and expensive
Sample
a group of people who are selected to respond to a market research excercise, eg a questionnaire. A random sample is when these people are selected at random. A quota sample is when they are selected based on characteristics.
Focus group
a group of people who are representative of the target market
+provide detailed information about consumers’ opinions
-time-consuming and expensive
-people could be biased from external people
observation
recording, watching and audits of how people use products
+inexpensive
-only gives basic figures, does not provide reasons for data
internal sources of information
Information readily available from firm’s own records. Can be used for secondary research eg sales records, public relations opinions, finance department information
External sources of information
information obtained from outside of the company. Inevitably general and unspecific in nature. eg government statistics, newspaper articles, trade association, market research agency, internet
what makes accurate information?
phrasing of questions, size of sample, sample selected, pilot surveys, how information was gathered, bias, age of information
marketing mix
a term used to describe all the activities which go into marketing a product or service. These activities are often summarised as the four ‘P’s: product, price, place and promotion
Types of products
consumer goods, (goods consumed by people ie food or furniture); consumer services, (services produced for people ie education hairdressing); producer goods, (good produced for other businesses eg machinery); producer services, (services produced to help other businesses)
What makes a product successful?
satisfies existing needs and wants of customer
design - performance, reliability, quality should all be consistent with the products brand image
capable of stimulating new wants from the consumer
not too expensive to product
first business to produce the new product or introduce new version
distinctive or different
Unique selling point
the special feature that differentiates it from the products of competitors
benefits of developing new products
USP means business will be first into market with new product
diversification of business
expand into new markets
expand into existing markets
costs of developing new products
carrying out + analysing market research;
producing trial products
lack of sales if target market wrong
loss of company image
Brand name
the unique name of a product that distinguishes it from other brands
brand loyalty
when consumers keeps buying the same brand again and again instead of choosing a competitor’s brand
brand image
an image or identity given to a product which gives it a personality of its own and distinguishes it from its competitos’ brands
packaging
the physical container or wrapping for a product. It is also used for promotion, selling appeal and conveying information.
what is the product life cycle
the stages a product will pass through. development Introduction Growth Maturity Saturation Decline
how to extend product life cycle
introduce new variations of original product sell into new markets change design, colour or packaging update advertising caimpaign introduce new, improved version sell through additional outlets
A business would adopt a new pricing strategy to:
try to break into new market
try to increase its market share
try to increas its profits
make sure all its costs are covered and profit is earned
Cost plus pricing
the cost of manufacturing the product plus a profit mark-up
+this method is easy to apply
-you could lose sales if selling price is higher that competitors
competitive pricing
when the product is priced in line or just below competitors’ prices to try to capture more of the market
+sales are likely to be high
-research required costs time and money
penetration pricing
used when trying to enter a new market. The price would be set lower than competitors’ prices.
+ensures sales are made
-profit is low
price skimming
where a high price is set for a new product on the market for its novelty, quality and to pay back lots of research and development costs
+help establish the product as good quality
-high price puts off potential customers
promotional pricing
when the product is sold at a very low price for a short period of time
+useful for getting rid of unwanted stock
+helps renew interest in a business if sales are falling
-low sales revenue
psychological pricing
an approach when particular attention is paid to the effect of the number on customers perception of the product
- eg charging a high price so that it becomes a status symbowl
- eg charging 99 cents instead of 1 dollar to seem cheaper
- eg supermarkets charge low price for common items to seem like it gives god value
dynamic pricing
when customers are split into two or more groups and charged different prices for the same things due different price sensitivities. eg airplanes charging more at christmas
+increased sales revenue and proft
+all “seats” are filled
-costs money to change price
-customer has to search around for best price
price elasticity
a measure of the responsiveness of demand to a change in price
inelastic - if price changes, demand doesn’t change very much eg petrol
elastic - if price changes, demand changes significantly eg chocolate bars
aims of promotion
to inform people about particular issues (ie governments)
to introduce new products on to the market
to compete with competitors’ products
to create a brand image
to increase sales
to improve the company image
informative advertising
where the emphasis of advertising or sales promotion is to give full information about the product eg this shower filter uses carbon technology to purify water
persuasive advertising
advertising or promotion which is trying to persuade that consumer that they really need the product and should buy it eg models in our commercials use this product so if you want to be cool like models you should use it too.
the advertising process
- set objectives (the purpose of the advertising)
- decide the advertising budget (usually between 2 and 20 percent of expected sales revenue)
- create an advertising campaign
- select the media to use (posters? tv ads? which is most cost effective?)
- Evaluate the effectiveness of campaign (did sales increase?)
target audience
refers to people who are potential buyers of a product or service
+ve and -ve of advertising using television
\+millions of people will see it \+makes product/ service look attractive \+can target audience with tv programmes -very expensive eg household products, cars, food
+ve and -ve of advertising using radio
\+cheaper than tv \+reaches large audience \+uses tune -no visuals -expensive -must be remembered bc no hard copy -not as many people as tv eg local services/ events
+ve and -ve of advertising using newspapers
+can put advert in target markets newspaper
+reaches lots of people
+cheap
+people can cut them out and save
+can convey lots of information
-not very eye catching (black and white)
eg local events, local products or cars, national banks
+ve and -ve of advertising using magazines
\+very effective for reaching target audience (eg bike advert in bike magazine) \+in colour/ attractive -published infrequently -more expensive than newspapers eg specialist products
+ve and -ve of advertising with: posters or billboards
\+permanent \+cheap \+seen often -easy to miss -cant convey lots of info eg common products or local events
+ve and -ve of advertising with: cinema or dvd
\+visual \+low cost \+easy to target target audience -seen by limited people eg film trailers or coca cola
+ve and -ve of using leaflets to advertise: leaflets
\+cheap \+given to wide range of people \+permanent -may not be read -annoys potential customers eg local events, retail outlets
+ve and -ve of advertising with: internet
\+conveys lots of information \+orders can be made instantly \+email adverts free/cheap -seo may not work -limited internet in some countries -lots of competition -customers may distrust buying things online eg familiar goods, insurance, transport tickets
+ve and -ve of advertising with other forms of puiblicity
+very cheap eg tshirts, bags, delivery vehicles
-may not be seen by customers in target market
eg retail
+ve and -ve of advertising using product placement
+products are associated with the image in the programme or movie
+can target a specific audience who view the programme, movie or music video
-expensive
-negative effects on the consumer if image is unnattractive
eg fancy cars, pomegrante juice
sales promotion
incentives such as special offer or special deals aimed at consumers to achieve short term increase in sales
types of sales promotion
Gifts (stickers inside cereal boxes)
Buy one get one free (BOGOF)
Competitions (charlie and the chocolate factory)
point of sale displays and demonstrations (special display of product)
after sales service (free oil change for buying a car???)
free samples (!!!)
advantages of sales promotion
helps during off season
encourages new customers
encourages existing customers to buy more frequently
encourages customers to choose you over competion
marketing budget
a financial plan for the marketing of a product of product range for a specified period of time
what to consider when choosing promotion
stage of product life cycle (ie new = informative, mature = persuasive)
nature of product
culture (especially when marketing international products)
nature of target market (dont advertise childrens toys on the radio)
+ve and -ve of advertising on social media
\+reach specific demographic \+hard to miss \+updated regularily \+cheap \+reaches certain groups that are hard to reach -annoying -pop ups cost money -lack of control (ie google adverts)
+ve and -ve of advertising on own website
\+free \+control \+can be updated frequently \+can be interactive + fun \+conveys lots of information -seo may not work well -design costs high -relies on customers finding website
distribution channel
the means by which a product is passed from the place of production to the customer or retailer
Producer->consumer distribution channel
+simple, suitable for perishable products, lower prices, easy with mail and internet
-impractical bc consumers do not live next to factory, some items cant be sent via post, expensive to post thing
producer->retailer->consumer distribution channel
+sold in large quantities
+reduced distribution costs
-no direct contact with consumers
producer->wholesaler->retailer->consumer distribution channel
+no storage costs, retailers can buy small quantities, trade credit, wholesaler can advise retailer
-more expensive for retailer, wholesaler might not have full range, not good for perishables, wholesaler can be miles away
producer->agent->wholesaler->retailer->consumer
+easy for producer
+most efficient for producer bc agent is clever
-less control
agent
an independent person or business that is appointed to deal with the sales and distribution of a product of range of products
e commerce
the buying and selling of goods and services using computer systems linked to the internet
methods of distribution
department stores, chain stores, discount stores, superstores, supermarkets, direct sales, mail order, internet/ e commerce
opportunities of e commerce to business
websites can be used to promote the company cheaply
orders can be takes over computer
consumers easy to encourage to buy more
business to business commerce is efficient
opportunities of e commerce to consumers
no need to leave the house
comparison between prices and products is easier
payment via credit/ debit card easy
consumers can buy foreign goods
threats of e commerce to business
Globalisation leads to high competition
website design expensive
transport costs are expensive
no face to face contact so must conduct market research
returns are common and expensive
large warehouse required
doesnt work for services eg hair dressing
threats of e commerce to consumers
internet required system failure is frustrating products cannot be tested/touched/tried on extra information is hard to get identity theft is a threat
factors affecting which distribution channel to choose
what type of product is it? is the product very technical? how often is the product purchased? how expensive is the product? how perishable is the product? where are customers located? where do competitors sell their products?
marketing strategy
a plan to combine the right combination of the four elements of the marketing mix for a product or service to achieve a particular marketing objective
what are some common marketing objectives?
increasing sales of existing product/ services in new markets
increasing sales by improving existing product
increase market share
maintain market share
increase sales in niche markets
how to enter new markets abroad
joint ventures, licensing (business lets other business sell patented products), international franchising, localising existing brands (eg mcdonalds selling sides of rice in Thailand and spicier sauces)
opportunities of entering new markets abroad
growth potential, home market saturated, wider choice of location, trade barriers lowered
problems of entering new markets abroad
lack of knowledge, cultural differences, exchange rate changes, import restrictions, increased risk of non-payments, increased transport costs
legal controls on marketing
weights and measures, trade description and flaws must be recorded accurately. distance selling regulations (customers have seven days to return product). illegal to make misleading price claims.
