Section 3 - Marketing (Chap 10 - 17) Flashcards
define marketing
identifying customer wants and satisfying them profitably
roles of marketing
-identifying customer needs - what they want & how much they’re willing to pay
-satisfying customer needs - to ell service & goods profitably
-maintaining customer loyalty
-anticipate changes in market - knowing new trends
define customer loyalty
existing customers continuously buy products from the same business
define customer relationships
-encouraging customers to be loyal to the business
what is down side of marketing on wants
wants are limited to how much money people have
define market share
% of total market sales owned by a business
benefits of a good marketing department
-raise customer awareness for product
-increase revenue & profitability
-increase/ maintain market share
-enter new markets
-develop/ improve products
rule for customers
customer is always king/ queen
difference btw a customer & consumer
-customer- buys products
-consumer- uses products
define customer
person who buys products
define consumer
person who buys product for personal use
note: company - customer - consumer
what does customer satisfaction cause
-value for money
-customer loyalty
-repeated purchases
define anticipating changes
making futuristic call on changes
define market
-where buyers & seller come tgt to cater to demographic
4 market changes
-technology- new products replace old ones
-taste & fashion - what people like/ trend
-income - people’s salary - affects sales on luxury items (wants)
-population - no. people & age - affects sales
what should businesses do if there are lots of competition
-globalization - operate business worldwide
-maintain good customer relations - research info on what they want
-improve existing product - to differentiate product from competitors
-new products
-lower costs = lower prices
why are some markets competitive
-globalization
-easier & cheaper transport
-e-commerce
define market
made up of customers & seller for a service/ good
define market segment
-sub groups of a market which share similar characteristics
ways to segment a market
-population - age & gender
-geographical factors
-life style
-religion
-social economic groups (classes of people)
-uses of product - how is target for which method use of product
how to decide how to segment market
-analyze market size & potential sales
-company branding - which customers to cater to
-cost to enter each segment
benefits of market segments
-cost effective marketing expenditure by meeting targeted customers = higher sales
-opportunities to increase sale by identifying a market segment with needs not fully met
2 types of market
-niche market
-mass market
advantages & disadvantages of mass market
advantages:
-can benefit from economies of scale (EOS)
-opportunity for growth from high sales
-more safe
disadvantages:
-high competition
-high cost for advertisement & promotion
-may not meet specific needs for all customers
advantages & disadvantages of niche market
advantages:
-small businesses can successfully sell because larger business may have not identified them = less competition
-meets customers specific needs = customer loyalty & good customer relations
disadvantages:
-small market = limited sales potential
-usually businesses here specialize in 1 product = risk when product not in demand
define mass market
-market with large number of sales of general products for everyone
define market research
-process of gathering, analyzing & interpreting info. about the market (before selling)
define niche market
-market segment for specialized products & people are willing to pay a high price for it
-short lived - based on trends
-more profits
define product orientated
-making & selling a product without market research
-less cost, time, effort
-make general products
define market orientated
-doing market research before making product
-more success (but not guaranteed)
define marketing budget
-financial plan for marketing a product so the marketing department know how much it may spend
2 types of market research
-primary research
-secondary research
define primary research
collecting original data by contacting potential customers directly
advantage & disadvantages of primary research
advantage:
-first hand info
-new & specific info.
-accurate & reliable
-not available to other businesses
disadvantage:
-more time, effort, expensive
advantage & disadvantages of secondary research
advantages:
-cheaper
-assess total market size
-quick
disadvantages:
-old & not specific info.
-available to all businesses
-irrelevant data = unreliable
define secondary research
using info that has already been collected & available to other businesses
examples of internal secondary research
-finance department
-customer service department
-sales reports
examples of external secondary research
-newspaper
-gov. statistics
-online sources
-competitors website
define focus groups
-people who are represent the target market
eg of primary research
-interviews - direct, timely & costly, can lie, may forget, body language
-questionnaires - easy, misleading Qs, more detailed info, may lie
-online surveys - fast, easy, misleading Q, lie
-focus groups - costly, detailed info, cheaper than individual interviews, time consuming
define sampling
groups of selected people who respond to a market research
(only in primary research)
define random sample
people selected randomly as a source of info for market research
define quota sample
specific people selected as a source of info for market research
ways to choose sampling
-random - for general products - varied & biased responses - unreliable
-stratified - specific people - more meaningful responses
-quota - people are choose specifically - specific responses
factors that influence accuracy of market research
-sample selected & size of it
-wording of questions
-Primary / secondary research
-bias
-who did research
ways to present data
-table/ tally chart
-diagram
-line graphs
-charts - pie, bar
define marketing mix
-4 key activities that make marketing a product/ service successful
-Product
-Price
-Promotion
-Place
types of output
-consumer goods
-producer goods
-consumer service
-producer service
define consumer goods
goods bought by consumers for their own use
define producer goods
goods make for other businesses to use
define consumer service
service used by consumers
define producer service
service for other business
what makes a product successful
-satisfy customer needs & wants
-good quality
-production cost is relative to price
-fitting of brand
-long lasting
stages of product development
-generating ides - brain storm/ brain still
-select ideas - for further research
-feasibility - decide if product is worth selling by considering the resources, profit and capacity to produce
-develop a prototype
-launch product in test market
-full launch of product
define feasibility
deciding if product is worth selling by considering the resources, profit and capacity to produce
Ways to brand
-brand image
-logo
-colour
-music
-name
-font
define UPS
-Unique, Selling, Point (all products need this)
-special feature of a product that differentiates it form others
advantages & disadvantages of making new products
advantages:
-UPS
-more range of products to sell
-expand into new/ existing markets
disadvantages:
-cost for market research
-cost to make prototype
-risk of lack of sales
-loss of company image if product doesn’t meet customer needs
define brand image
identity of product which distinguishes it from other products
uses of branding
-creates a distinction
-gives product identity
define product life cycle
stages a product goes through form introduction to decline of it
stages of a product life cycle
-development - making product - no, sales, unprofitable, expensive
-introduction - informative ads, risky, low sales, unprofitable, expensive
-growth - product is accepted - more sales, expensive, competition
-maturity - max sales, lots of competition, no need for ads
-saturation - too much competition, low sales, ads again
-decline - low sales, think of replacing product, discontinue (remove stocks)
ways to extend product life cycle
-new variation - eg, flavours
-new packaging - eg, diff colour/ shapes
-find new uses for it
-find new markets - eg, export
-reduce price/ discounts
-promotion
define extension strategy
keeping maturity stage & extending life cycle of a product
define packaging
physical wrapping of product, also used for promotion & selling appeal
uses of packaging
-protect goods - eg, export/ import, suitable for product to fit in
-attraction - eg, eye catching, promotes brand image
-information - eg, nutrition value
-convenience - eg, easy to carry
define crowd funding
-people willing to invest even though they haven’t seen the product
define price
what customer pays for a product
-if brand loyalty, price don’t matter
-value of money = repeated purchases
methods of pricing
-skim pricing - high price for unique product, profit before competition start = recover cost (objective)
-penetration pricing - low price for product, more sales (objective), eg. necessary good
-promotional pricing - give discounts/ gifts with products, more sales/ remove goods (objective)
-competitive pricing - price as competitors price, +/- depending on quality
-cost plus pricing - find cost of product & add profit wanted
-dynamic pricing - price change depending on demand eg. aeroplane tickets
define dynamic pricing
businesses change product prices depending on level of demand
define cost plus pricing
cost of producing product plus a profit mark
advantages & disadvantages of cost plus pricing
advantages:
-easy to apply
-diff profit mark up for diff markets
disadvantages:
-lose sales if price is higher than competitors
-total profit only made if enough units sold
define competitive pricing
product priced just below competitors to capture more market
define promotional pricing
product sold as low price for a period of time
advantages & disadvantages of competitive pricing
advantages:
-likely high sales since price is realistic
-used when it’s difficult for consumer to tell diff btw businesses
disadvantages:
-production cost could be higher than competitors = loss
-high quality need to to sold above competitors price
advantages & disadvantages of promotional pricing
advantages:
-removing unwanted inventory
-renew interest in product
disadvantages:
-low profit
-pricing competition with competitors = reduce pricing again
define penetration pricing
price is lower than competitor when entering a new market
advantages & disadvantages of penetration pricing
advantages:
-creates impact with customer
-ensures sales = product successfully enter market
-market share builds up
disadvantages:
-low profit
-customers used to low price & reject it when price goes up
-not appropriate for brand image/ product quality
advantages & disadvantages of price skimming
advantages:
-establishes product as good quality
-cost for product making can be recouped quickly from high price of product
-if unique, lots of profit before competitors launch similar products
disadvantages:
-high price discourage potential buyers
-high profitability encourages competitors in market
define price skimming
high price set for new product in the market
define price elasticity of demand
-how responsive the demand for a product is when it’s price changes
define elastic demand
consumer sensitive to price change
-small change in price causes big change in demand
-eg, luxury goods
define Inelastic demand
consumer insensitive to price change
-demand does not change much when price changes
-eg, necessary goods
define promotion
-marketing with aims to raise customer awareness of product/ brand to make more sales
aims of promotion
-introduce new products to market
-compete with competitors products
-improve company image
-increase sales
-create brand image
define advertising
communicating with potential customers to encourage them to buy a product
-informative
-persuasive
define informative advertising
emphasizes on giving information on product
define persuasive advertising
persuading customers that they really need the product
define target audience
potential customers
medias for advertising
1) TV - lots of viewers, product can look attractive, reach biggest target audience can show demo/ expensive depending on prime time = most viewership hours, young people don’t watch often
2) radio - cheaper than TV, large target audience, can uses memorable tune/
no visual msg, expensive
3) newspapers - large target audience, newspapers are cheap = cost effective, can put lots info/ only black & white = not eye-catching, young people don’t read
4) billboards - permanent, cheap, potentially seen by passerby, attractive, lots of colours = seen/
can easily be missed, no detailed info
5) internet - can put lots of info, order can be made instantly, direct mail sent is cheap/
internet access limited to some countries, lots of competition, security issues
6) movies: before & after intermission
ways to promote
-advertising
-sales promotion
-public relations
define sales promotion
special offers for short term increase in sales
types of sales promotio
-after- sales service = assurance that product will be taken back/ repaired without charge
-gifts = usually for children
-Buy One Get One Free
-price reduction = linked to loyalty cards/ flash sales
-entering competition
-free samples
-Point of Sales Display
advantages of sales promotion
-promote sales when sales are low
-encourages new customers
-encourages existing customers to buy more
-encourages customers to buy from you than competitor
what is above the line promotion
-positive methods of promotion
-ads - sponsoring
-public relation - creating a positive image by doing good things
what is below the line promotion
-negative methods of promotion
-sales promotion - give something additional to increase sales (usually for products with ending shelf life eg, sample, buy 1 get 1 free, gift, coupon, lottery
define Point Of Sales Display (POS)
-products specifically placed around the entrance/ counter to entice buyer
define Public relations
-creating a positive image by doing good things to increase sales
-good for negative products - eg, beer, cigar
eg. raising awareness, sponsoring, donating
examples of direct marketing
eg. door to door selling, spam emails, social media
define marketing budget
financial plan for marketing a product for a period of time
note: businesses need online presence & reviews
define free publicity
people say good things about products without the company having to give them money
what kind of products are usually distributed
general products more than specialized products
types of channels of distribution
-direct to customers
-using a retailer
-using a retailer & a wholesaler
advantages & disadvantages of channels of distribution: direct to customer
advantages:
-simple channel
-suited for some products eg. food
-lower price if sold directly
disadvantages:
-impractical because of distance btw factory & customers
-not suitable for products easily sent by post
-expensive to send by post = not cost effective
advantages & disadvantages of channels of distribution: using a retailer
advantages:
-sell larger quantities
-less distribution cost compared to selling directly to customers
disadvantages:
-no direct contact with customers
-price is higher than direct selling because retailers have to make a profit
advantages & disadvantages of channels of distribution: using a wholesaler & retailer
advantages:
-wholesalers save storge for retailers = less storage costs
-retailers have fresh products
-wholesalers may give credit to retailers
-wholesaler may deliver products = transportation costs
disadvantages
-more expensive for shop to buy from wholesaler than factory
-take longer for fresh produce to reach shop
-higher pricing
define agent
appointed independent person/ business who deals with sales & distribution of products
advantages & disadvantages of agent
advantages:
-manufacture may not know best way to sell product
-agents more aware of most effective places to sell
disadvantages:
-producer has less control
example of places of distirbution
-department stores
-supermarkets
-e-commerce/ internet
-mail order
channels of distribution & their roles in order
-manufacturer - makes product
-whole seller - sells products in bulk (cheaper in bulk = can negotiate prices), experts of distribution
-retailer - shop owners
-customer/ consumer
factors affecting distribution channels
-type of product
-how often product is purchased
-how expensive product is
-how perishable product is/ shelf life
-where customers are located
-where competitors sell products
how has technology affected the marketing mix = good & (bad)
Products = better stronger, long lasting
Promotion = viral marketing, cookies, history, range of customers, cheap, (short attention span)
Place = changes the pricing to dynamic pricing
Packaging = more protective
which role takes the most risk during distribution of products
-retailers can return product to whole sellers but whole sellers cannot return back to manufacture
define marketing strategy
plan with the right combination of marketing mix to make a product successful
legal controls when marketing
1) cannot give wrong weights & measures
2) trade description = wrongly described product
3) sale of goods = product should fit for its purpose (no defects)
4) sale = right price & no illegal goods advertised
5) no lying about supply of goods & services
define social media marketing
internet marketing by creating/ sharing content
advantages & disadvantages of business having their own website
advantages:
-control advertising
-can change adverts quickly
-provide more info
disadvantages:
-people may not see website because of lots of search results
-relies on customer finding website
-website design cost
-maintaining website domain
define e-commerce
buying & selling on the internet
advantages & disadvantages of e-commerce
advantages:
-low cost promotion
-global coverage
-access many customers
-convenience
-easy to pay
disadvantages:
-setting up website costs money
-technical problems
-competition from other websites
-need internet access
advantages & disadvantages of advertising on social media
advantages:
-can reach target audience
-updated info = speed response to market changes
-cheap
disadvantages:
-can be found annoying
-lack of control of advertising if used by others
-messages can be altered
define marketing strategy
combining the right marketing mix for a product/ service
examples of marketing objective
-increase sale by selling to new markets
-increasing sales by improving product
-increasing/ maintaining market share
advantages & disadvantages of entering new markets in other countries
advantages:
-greater growth potential
-home market may be saturated = new market has chance of higher sales
-wider choice of location
disadvantages:
-lack of knowledge of consumer habits & competitors
-cultural differences
-instable exchange rates
-import restrictions
-increased transportation cost
ways to overcome entering new markets in other countries & their advantages & disadvantages
method = advantages/ disadvantages
1) licensing = allow company in new market to product products under the license
products not physically transported = save time & transportation costs/ quality problems
2) international franchising = foreign franchise operate franchise in new market
local knowledge of place/ quality problems, training workers
