THEME 1.1: MARKETING & PEOPLE Flashcards
name types of MARKETS
●B2B(business to business)
●B2C(business to customer)
●local vs national
●physical markets
●online markets
●mass market
●niche market
●stock exchange market
advantages of MASS market
●appeals to large no. of customers
●more potential sale
●less risky
●mass production leads to economies of scale (lower average unit cost)
●market leader in a mass market can be very profitable
disadvantages to MASS market
●creates more competitors
●need to be able to operate on a larger scale
●product harder to personalise
what is MASS MARKETING?
●where a business sells into the largest part of the market where there are many similar products on offer
what is NICHE MARKETING?
●where a business targets a smaller segment of a larger market where customers have specific needs and wants
what is a MARKET?
●an activity a company undertakes to promote the buying/selling of a product/service
how to calculate market SIZE by VALUE?
●market size by value - the total amount spent by customers on all the products & services involved
how to calculate market SHARE?
sales of 1 brand or product
÷ total sales in the market ×100
what is market size?
●the measurement of all the sales by a business that supply products & services to that market
how do you calculate MARKET SIZE BY VOLUME?
market size by volume - the quantity of the products & services purchased
what are the ADVANTAGES of a NICHE MARKET?
●change to premium price
●easier to target customers
●small scale production can be flexible and follow trends
●less competition than in mass markets
what the DISADVANTAGES of NICHE MARKET
●very risky as demand may not be constant
●higher unit costs, so no economies of scale
what is the cycle of MASS MARKETING?
mass marketing-> higher sales-> mass production-> lower costs & higher profits
why is MARKET SHARE IMPORTANT?
● to assess their position compared to competitors
● decide if they should adjust their strategies
● are the same strategies working?
how does COMPETITION affect the MARKETS?
●competition occurs when 2 or more businesses act independently to supply goods/services to the same group of consumers
what are the 2 parts to MARKET RESEARCH?
●what a business needs to know
●how that knowledge and understanding can be obtained (research methods)
WHAT DOES A BUSINESS NEED TO KNOW?
● MARKET FUNDAMENTALS - starting point for any business, which includes:
•how BIG is the market?
(measured by sales/volume)
•how FAST is the market growing & what is the market growth potential?
•who are the existing competitors & what market shares do they have?
•how is market segmented?
•what kind of customers?
•market trends!
HOW can the knowledge and understanding be obtained? (RESEARCH METHODS)
•PRIMARY data: data collected first-hand for a specific purpose by the business
•SECONDARY data: data that already exist & which has been collected for a different purpose
what is a DYNAMIC MARKET?
A dynamic market is a market that is subject to rapid or continuous changes
what are some factors that influence whether a market is DYNAMIC?
changes in technology
changes in what consumers want (tastes & fashion)
changes in demographics (e.g. immigration)
products and services becoming obsolete
new and original ideas
adapting existing products, services and ideas
what is a STATIC MARKET?
a price point manually set by a reseller that won’t change
what are DIRECT competitors?
the business is targeting customers with the same product as a competitor
what are INDIRECT competitors?
the business sells different products but compete with each other for the customer disposable income
what are CONSEQUENCES of a DYNAMIC MARKET?
Invest in R&D (research & development)
different machinery needed so flexible workforce of staff needed
market research necessary but is very expensive to keep up with change
what is MARKETING ORIENTATION?
A business continually identifies, reviews and analyses customer WANTS AND NEEDS (market research)
what is PRODUCT ORIENTATION?
A business concentrates on the PRODUCTION PROCESS and PRODUCT itself and produce them effectively and efficiently (R&D)
what are ADVANTAGES of MARKET orientation?
-more chance of selling due to appealing to customer tastes
-respond quickly to changes in the market with having customer information
-stronger position to stand against new competitors
-anticipate market changes so have a competitive advantage
EFFECTS of MARKET orientation
-continuous customer consultation (market research)
-design product according to what the customer wants
-quantity produced must match customer demand
-distribute products to match buying habits and delivery requirements of customers
what are the ADVANTAGES of PRODUCT orientation?
-more chance of developing innovative products which could retail at a higher selling price (reduced price elasticity of demand)
-so can create a first mover advantage
what FACTORS influence either choice of MARKET/PRODUCT orientation?
-the nature of the product
-policy decisions
-the views of those in control (marketing directors)
-the nature and size of the market
-the degree of competition the business faces within their market
what is SECONDARY RESEARCH?
research available outside business collated by others
what are search engine searches used for?
starting point to quickly identify the main reports/websites/organisations to speed up the research process
what are government websites used for?
Office of National Statistics provide detailed insights of the UK economy and society with individual departments with detailed reports within many industry sectors
what are trade associations used for?
to promote the market and protect members interests as a source of market analysis
what are trade magazines used for?
essential reading for an entrepreneur with a start-up of little experience to keep up to date with market news/new products
what are yellow pages used for?
online and offline information that give details of existing competitors and suppliers in a market
what are comparision sites used for?
allows a start-up too compare and contrast pricing strategies of existing competitors to focus on larger consumer markets e.g. travel
what are competitor websites used for?
get valuable information on the marketing mix of the business against which the start-up must compete
what re market research reports used for?
to produce a variety of organisations to analyse individual markets expensive but give an overview and not detailed insights into a specific market\
what is PRIMARY research?
research you conduct yourself (or hire someone to do for you.)
It involves going directly to a source – usually customers and prospective customers in your target market
what are the main questions for PRIMARY research before trading?
-what do potential customers think of my new product/service?
-how can I obtain supplies of the right goods at the best price?
-what price should I charge?
-what is the best way of reaching potential customers?
what are the CONSEQUENCES of PRIMARY research?
-time consuming
-expensive
-might not be accurate because answers may not be true
what are FOCUS GROUPS used for ( primary methods)
-focus groups: groups of potential customers brought together to discuss their feelings about a product/market
what are TELEPHONE INTERVIEWS used for ( primary methods)
-a market researcher contacts members of the public to seek answers for certain questions and popular to get an opinion
what are POSTAL SURVEYS used for? ( primary methods)
-sent to the address of potential customers who are then expected to complete them at home and return them, usually in a pre-paid envelope
what are PERSONAL INTERVIEWS used for ? ( primary methods)
-these are conducted face-to face with the interviewer filling in the answers given by the interviewee
what is TEST MARKETING used for? ( primary methods)
-this involves selling a new product in a restricted, often geographical, section of the market in order to assess customer reaction
what are OBSERVATIONS used for ? ( primary methods)
stores watch customers while they shop and gather information on customer reactions and thought processes to enable stores to gain useful data e.g. displays/offers to attract the most interest
what are INTERNET SURVEYS used for? ( primary methods)
- questionaries using this increasingly popular method enable customers to express their views about a product/service/company so give valuable information to the business
what is QUANTITATIVE market research?
It uses mathematical analysis and data to shed light on important statistics about your business and market.
what is QUALITATIVE market research?
information that cannot be counted, measured or easily expressed using numbers
what are ADVANTAGES of quantitative research
-data summarized in a concise and meaningful way
-numerical data allows comparison of results and the identification (easy to analyze)
- useful for extrapolation ( extend for growth - sales forecasting)
what are the DISADVANTAGES of quantitative research?
-show ‘what’ rather than ‘why’
-the data obtained is less useful for helping a business understand the reasons behind trends
-sample size may be wrong
-lack reliability and validity if sample is too small or biased
what are the ADVANTAGES of qualitative research?
-examine WHY customers behave
-highlight issues and give detailed insight of customer thinking processes when they buy products
what are the DISADVANTAGES of qualitative research?
-time consuming
-expensive to get skilled people
-on a small scale
-difficult to quantify (comparisons and analysis more difficult
what are RANDOM SAMPLES?
equal chance of anyone being picked
-may select those not in the target group (indiscriminate) - random
-sample sizes may need to be large to be representative
-can be very expensive
what are QUOTA SAMPLES?
- by segment
-not randomly selected
-specific number on each segment are interviewed
-may not be fully representative
-cheaper method
what are FACTORS that influence what sampling it is?
-target audience to be specific requirements
-budget (finance) available
-time available
USE OF ICT- market research
social networking- key element of marketing and cheap way of informing customers
company websites- access to online surveys and cheap to put in place and give detailed feedback- compare to competitor websites
what is market segmentation?
market divided into market segments
-each segment= customer with similar needs and wants
-target 1 product at 1 segment
-produce a range of products & target at several segments
-dividing markets allows supply products that meet customer needs
what are the 4 ways to segment a market?
-GEOGRAPHIC
-DEMOGRAPHIC
-BEHAVIOURAL
-PSYCHOGRAPHIC
geographic market segment:
-customer location
-region
-urban/rural
-ACORN classification
demographic market segment:
-age
-gender
-occupation
-socio-economic group
behavioural market segment
-rate of usage
-benefits sought
-loyalty status
-readiness to purchase
psychographic market segment
-personality
-lifestyles
-attitudes
-class
