Section 3 - Marketing Performance Flashcards
What are marketing objectives?
goals/targets set by the marketing dept.
Why are marketing objectives important?
- help set direction of the business
- ensure the customer has a good experience
- ensure the business makes a profit
What do marketing objectives need in order to be successful?
- need to be SMART
- good fit with mission statement and general objectives
Define sales volume
number of products or services sold (whole numbers)
eg. 150,000 cars in 2019, 2,812 pizzas in april
Define sales size
$$$ revenue earned from selling products or services
eg. $250k selling ice cream, $2m in sales
Define market growth
the percentage growth in the size of the market, measured over a specific period.
What is the equation for market growth?
(market size (year 2) - market size (year 1) / market size (year 1)) x100
Define market size
the total number of potential buyers for your product, the value
Define sales growth
a measure of the change in revenue over a fixed period of time
What is the equation for sales growth?
(sales (year 2) - sales (year 1) / sales (year 1)) x 100
Define market share
the percentage of a market’s total sales, that is earned by a particular company over a specified time period
What is the equation for market share?
(sales of business / total market sales) x 100
Define brand
a name, sign, symbol, design or slogan linked to a particular product or service to differentiate from competition.
Define brand loyalty
repeat purchases of a particular brand based on the perception of higher quality and better service than any competitor
Name 4 external influences on marketing objectives
- PESTLE factors
- nature of the market
- amount of competition in the market
- ethics
Define external influences on marketing objectives
outside the business that may have an impact on the marketing objectives that are set
Define internal influences on marketing objectives
anything that is inside the business and under the control of the owners
Define market mapping
process of finding the variables which differentiate brands in a market and then plotting them on a map
What is market mapping used for?
- to identify gaps in the market
- work out who the competitors are
- position the product in the market (eg. Pricing)
- decide what to sell
Define market research
researching the conditions of the market (eg. Customers, competitors etc)
How can quantitative data be collected?
- questionnaires conducted to gather numerical data
- data displayed with charts, graphs as statistics and percentages
How can qualitative data be collected?
- focus group discussions
- interview consumers on their thoughts about a product
- observations of buyer behaviour (eg. Only family groups bought the squash)
What does quantitative research do?
measures response more quickly, info clearer by asking questions to large sample
What does qualitative research do?
uses open-ended questions to find out a lot of information
Describe primary research
- data collected first hand
- new data gathered for benefit of the business
- specific to the needs of the business
Define secondary research
gathering data which already exists – desk research
- can be biased and outdated
Name the 7Ps
Product
Price
Promotion
Physical environment
People
Place
Processes
Define PED
the responsiveness of demand to changes in price
Describe the 2 types of PED
Elastic - as price rises, demand falls
Inelastic - as price rises, response in demand remains the same (essential goods)
What can PED be used for?
- help set the price that will sell the most while making profit
- evaluate the impact of changes in price on sales and revenue
State the values of PED
- all PED values are negative
- elastic: values greater than 1 (eg. -1.27, -6)
- inelastic: values between 0 and -1 (eg. -0.7, -0.005)
How is % change calculated?
% change = (new - old / old) x 100
How is PED calculated?
% change in Q / % change in P (q=quantity, p=price)
Define YED
the responsiveness of demand to a change in income
How is YED calculated?
% change in Q (demand) / % change in Y (income)
State the values for YED
greater than 1 = income elastic
between 0 and 1 = income inelastic
less than 0 = inferior goods
Describe the YED of a luxury good
- increased income leads to bigger percentage increase in demand
- YED value for luxury goods is greater than 1 (0< YED <1)
Describe the YED of a normal good
- consumer demand increases when income increases
- YED values for normal goods are positive (YED >0)
Describe the YED of an inferior good
- increased income leads to fall in demand
- eg. someone gets a promotion and buys champagne rather than cheaper beer
- YED values for inferior goods are negative (YED <0)
Define segmentation
the process of dividing the whole market into smaller parts
What does segmentation allow a business to do?
enables the business to effectively target its products and services at the right customers.
Why might a business use segmentation?
allows business to confidently talk about things that matter based on:
- characteristics
- behaviour (buying habits)
- via flyers, social media etc.
- the more that is known about the target market, the better chances of success
What is the value of segmentation?
- specific customer groups can be targeted with appropriate products to satisfy needs and wants
- differentiated products - separating from the rest of the market, being different
Define targeting
way of identifying a group of people with similar characteristics and aiming an advertising message at them on a platform they might use
What is the value of targeting?
businesses develop objectives and a strategy to work out how to communicate with that segment
Define positioning
to promote and advertise a product or service in a specific market segment
What is the value of positioning?
- product or service is promoted to target segments
- promotions may be to inform, remind, engage or call to action
- positioning educates customers about features and benefits of products
Name 5 segmentation methods
- demographics (age)
- geographics (religion, location, weather)
- income (annual salary, type of job)
- social class (upper class, unskilled)
- behaviour (lifestyle/buyer behaviour)
Define mass markets
a market that is aimed at the general population (eg. Toothpaste)
What are the characteristics of a mass market
- products sold to consumers in the same way
- many products can be sold on global scale with just a few language tweaks
What are some advantages of mass marketing?
- large scale production means economies of scale and lower average unit costs
- straightforward marketing - everyone equally targeted
- large volume of sales means high revenue
- high revenues can be pumped into R&D
What are some disadvantages of mass marketing?
- lots of competition
- homogenous products need to be differentiated through marketing = expensive
- high volume production not flexible to demand changes
Why is branding important in mass markets?
to differentiate from competition (eg. Heinz ketchup vs own brand)
Define niche markets
specific subset of main market - addresses specialist needs (eg. Sensodyne toothpaste)
What are the characteristics of a niche market
- caters to particular segment of market that is not being met by other providers
- can charge a higher price as there isn’t much competition
- specific target market
What are some advantages of niche markets
- can charge premium pricing
- easier to target customers
- small scale of production can be flexible
- follow trends
- less competition
What are some disadvantages of niche markets
- risky as demand may not be constant
- higher unit costs - no economies of scale
What does a star signify in the Boston Matrix?
- high market share, high market growth
- need to maintain current marketing spend to keep sales high
- should become cash cows in time if managed correctly
What does a dog signify in the Boston Matrix?
- low market share, low market growth
- require no investment - decline phase of their life cycle
- may become obsolete or replaced
- businesses may consider discontinuing or withdrawing products
What does a cash cow signify in the Boston Matrix
- high market share, low market growth
- good sellers - little to no investment needed
- products are milked for cash
- needs monitoring - at risk for becoming a dog
What does a question mark/problem child signify in the Boston Matrix
- low market share, high market growth
- potential to become stars if managed correctly
- require a lot of investment in marketing and promotion in order to succeed
What are the advantages of using the Boston Matrix grid
- good starting point when reviewing an existing product line to decide future strategy and budgets
- conclusions drawn from this analysis transfer surplus cash from cash cows to the stars and question marks.
- dogs are closed down or sold.
- question marks reveal as either dogs or stars, cash cows become drained of finance and turn into dogs.
What are the disadvantages of using the Boston Matrix grid
- products may not be low or high - they could be somewhere in the middle
- high market share does not always lead to high profits - high costs are involved
- argued that the matrix is too simple
Define promotion
the use of marketing strategies to bring a product/service to the attention of potential buyers
Describe personal selling
- an e ffective way to manage business-to-consumer relationships.
- products with relatively high prices, or with complex features, are often sold using personal selling.
What are the advantages of personal selling
- salespeople are well-trained in the approaches and techniques of personal selling
- high customer attention
- adaptable
What are the disadvantages of personal selling
- salespeople are expensive; require training on top of their salary
- only reaches a limited number of
customers - labour Intensive
Describe direct marketing
- may include special o ers to re-engage existing customers.
- items carefully tailored to consumers based on previous buying history.
What are the advantages of direct marketing
- marketing message is personalised
- relatively easy to measure response & success
What are the disadvantages of direct marketing
- negative image towards junk mail
- responses can vary significantly
Describe ATL advertising
advertising to a mass audience through TV adverts, cinema adverts, online adverts
What is an advantage of ATL advertising?
reaches a large target audience
What is a disadvantage of ATL advertising?
very expensive
Describe BTL advertising
- advertising targeted to niche markets through leaflets, posters, websites, magazines.
- used to create awareness and communicate information to gain a response.
What are the advantages of BTL advertising?
- more a ffordable
- allows development of business-to-customer relationships
- easier to track budgets
What are the disadvantages of BTL advertising?
- training/investment may be needed to learn about the mediums/platforms involved
- need knowledge of how customer base
thinks and behaves
Describe public relations
- aims to build relationship between business and the public
- creates a favourable corporate image
- unpaid communication about an organisation results in promotion from mass media
What are the advantages of public relations?
- consumers trust messages from an objective source - builds influence.
- quality products can be picked up by news outlets/larger markets
- cost e ffective
What are the disadvantages of public relations?
- no direct control over what is being said about brand
- no guaranteed success
- dif ficult to measure eff ectiveness
Describe sponsorships
- a business will sponsor an event, team or individual in order to build brand awareness.
- a secondary objective might be to emphasise social or ethical issues.
Describe sales promotion
a marketing activity that is designed to increase sales, encourage customer loyalty, or generate brand awareness
Describe BOGOF (buy one get one free)
used to encourage customers to go into the shop or buy an item
What are the advantages of BOGOF?
- very popular
- encourages trial and use of products
- boosts sales, therefore sales revenue increases
What are the disadvantages of BOGOF?
- loss of profit - there is an increase in costs which is not balanced by increase in sales
- only useful in short-term
Describe price discounts
normal RRP (recommended retail price) of the product/service has been reduced
- good way to clear out old/out-of-date stock
What are the disadvantages of price discounts?
- may be considered a cheap option
- too many discounts may make customers suspicious
Describe money off coupons
- coupons can be used to capture new customers and add incentive
- coupons can be used to encourage impulse spending
What are the advantages of money off coupons?
- help customers feel they are getting value for money
- available from magazines, websites, loyalty cards and the back of packaging
What are the disadvantages of money off coupons?
- reduced profits
- customers may wait for coupons before
purchasing
Describe samples/giveaways
business’ may send out or give customers free samples to give them an idea of what they are purchasing
What are the advantages of samples/giveaways
- ideal for new product launches
- works well with certain products (eg. food, shampoo, skincare, makeup)
- encourages word-of-mouth
What are the disadvantages of samples/giveaways?
- not all customers want to try samples when shopping
- can be expensive to give away products for free
Describe special events
- events that encourage customers to try a product
- events can include; shows, fetes, fairs, business events (eg. special wine tastings)
What are the advantages of special events?
- rewards loyal customers
- ideal for smaller businesses
What are the disadvantages of special events?
- can be expensive
- hard to measure the value of the market
Describe point of sale
usually a display to draw customer attention and trigger an ‘impulse’ purchase
What are the advantages of point of sale?
- ideal way to promote new products
- works best with products that have a holiday tie (eg. easter eggs)
- can add extra punch with a discount
What are the disadvantages of point of sale?
- only successful if meets customer needs
- needs to be designed and for sale in time for event/holiday
- displays may be in poor locations (eg. next to a broken till)
Define branding
characteristics name or symbol that distinguishes one product from another supplier
Define manufacturer / corporate branding
- aims to communicate and develop relationships between business and consumer
- uses images and slogans to establish brand
What are the advantages of manufacturer/corporate branding
- spreads cost of marketing across all individual brands
- awareness of the company can be worldwide
What are the disadvantages of manufacturer/corporate branding?
- takes a long time to build solid brand image
- any unfavourable incidents (eg. Product recall) - whole brand suffers
- too much advertising can cause indifference towards the brand
Describe product branding
- aims to show the customer the features and benefits of a product that differentiate it from other products
eg. colour: mini eggs = yellow, KitKat = red
What are the advantages of product branding?
- branded products can command a higher price than non-branded
- businesses therefore can expect higher profits from branded cash cows
- good branding differentiates and creates customer loyalty
What are the disadvantages of product branding?
- product branding may require large investment
- product branding may take many years to build up
- limited flexibility when the product tries to develop new lines in the range beyond what they are known for
Describe own brand products
- products that are made by manufacturer on behalf of supermarket
Tesco: Value , Sainsbury’s: Basics
What are the advantages of own brand products?
- boosts customer loyalty to the supermarket
- competes with manufacturers brands
- fills gaps left by competition
What are the disadvantages of own-brand products?
- store brands can be made by numerous companies under supermarkets name
- Ketchup is good
- Cornflakes may taste like cardboard
Describe the value of branding
- a strong brand can add value to a product (both business and consumer) - eg. Kudos
- the brand gains value that helps if it gets sold
- brings loyalty
Define brandnomers
a brand that has become so dominant, all products are referred to using its name
What does branding do to PED?
branding reduces PED
Describe direct selling
- manufacturer sells directly
- no third-party involvement
- commonly sold online
○ Examples: Moonpig, Shein, Small businesses
What are the advantages of direct selling?
- all money goes to business
- business has full flexibility and control
What are the disadvantages of direct selling?
- lower total sales volume as customers don’t usually buy in bulk - more wholesalers and retailers.
- manufacturer has to manage increased distribution costs per sale
Describe retailing
- manufacturer produces products and sell to a retailer in bulk.
- aims to expand where customers purchase to range of locations.
- helps manufacturer sell more - retailers have wider reach and higher footfall.
- Examples: Samsung, Nike, H&M
What are the advantages of retailing?
- helps reach wider range of consumers
- distribution costs reduced
- increased convenience
What are the disadvantages of retailing?
- retailers only stock products if they see potential profit, they will pay less than a consumer would.
- not profitable per unit for business
Describe wholesaling
- wholesalers buy products from manufacturers in bulk
- aim of selling them on to various retailers - often independent sellers.
- Examples: multipacks of coca cola sold in one-stop shops
What are the advantages of wholesaling?
- allows manufacturers to guarantee high sales volume due to the amount of products a typical wholesaler would purchase.
- no need to invest as heavily in marketing as they still benefit from exposure.
- reduced distribution costs
What are the disadvantages of wholesaling?
- profit margins squeezed tighter
- manufacturer loses control
Define retailer
a business that sells goods directly to a consumer through a ‘bricks and mortar’ shop
Clicks vs Bricks and Mortar
Clicks: online presence
Bricks and mortar: physical presence
Describe direct-to-consumer distribution
- owner of retail shop may have bought goods from a wholesaler or manufacturer to sell onto consumer
- retailer will mark-up price - allows them to make a profit
When is direct-to-consumer distribution useful
- when customer needs help with a purchase or wants to see products up close - material, quality or size of a dress may be hard to determine online
- some customers may want to try products on before purchasing
Describe independent retailers
- not part of a chain (eg. Tesco)
- started by business owners - small retailers
- sell to more niche markets - more unique so higher price can be charged
- may have to compete on non-price factors such as customer service
What are the advantages of independent retailers?
- can be an enjoyable experience to go shopping
- retailers can make more of a profit
- good customer service
- provides job opportunities
- online shopping avaliable 24/7
- instant satisfaction - customers can have product as soon as it is bought
What are the disadvantages of independent retailers
- online shopping riskier - size, quality, material
- customers may find cheaper alternatives
- unsold stock
Describe integrated marketing mix
provides a seamless experience for the customers and attempts to co-ordinate and combine all the 7Ps
