topic 3- marketing Flashcards
what is marketing ?
what are the marketing objectives ?
sales volume and value
market size
market and sales growth
market share
brand loyalty
what are marketing objectives ?
targets that a company marketing department set itself
valuable in helping the company to achieve its overall objectives
what is sales volume ?
amount of sales expressed as a number as a number of units sold
sold over a certain period of time
- easy to visualise but it doesn’t tell you anything about the amount of money coming in from sales
what are sales value ?
amount of sales expressed as the total sum of money spent by consumers
- used when business sell a lot of differently priced items usually base objectives on salves value instead of volume
what is sales growth or market growth ?
business might aim for a growth in SALES or the MARKET
in VOLUME
or in VALUE
what is market share ?
is the proportion of total market sales that a firm has
- commonly want to increase there market share
how do u increase market share ?
- entice customers away from competitors
- attract brand new customers in a brand new market
why is market share useful ?
tells a business how well it is doing compared to its competitors
how can market share be calculated ?
business sales / market share x 100
what is market size ?
total size of …
the market
sales value
sales volume
- is increasing them growing in the market
how do you calculate market size ?
number units sold x price
how do u calculate market growth or sales growth ?
chnage in size of market or sales/ original size x 100
what is a good example of brand loyalty ?
social media
as allows customers and business to interact
why is brand loyalty important ?
- keeping customers is easier than finding new ones
- measured in terms of how many customers return
- bean’s and r an intangible asset and can be sold
what is brand loyalty ?
the tendency of some consumers to continue buying the same brand of goods rather than competing brands.
what are the 3 things that influence marketing objectives ?
- internal factors
- external factors
- laa
what are the internal factors that influence marketing factors ?
-corporate objectives
-finance
-human resources
what are the external factors that influence marketing objectives ?
-market
- technology
- competitors
- ethics and environmental factors
what are corporate objectives factors ?
objectives need to be aligned with the company’s overall goal
what are finance factors ?
is allocated a marketing budget
- affects what the marketing department are able to do
- if cut then objectives need to be scaled down
what arehuman resources factors ?
identifies how many staff the company needs
- if reduced or increased they will need to adjust there objectives for what is achievable for staff levels
what are market factors ?
state of economy has a big impact
what to do if an economic boom ?
economic boom is a good time to try increase sales volume as income levels have risen
what to do if economic recession ?
more likely to have objectives of maintaining market share
what are technology factors ?
if tech changes rapidly in that market then objectives tend to be on sales and price as new tech causes prises to fall and rise fast
what are competitors factors ?
actions of competitors affect marketing objectives especially in a high competitive market
what are the ethics and environmental factors ?
awareness is increasing for consumers
if behave in a harmful way can damage brand image
so need to be ethical and environmental conscious
how does the law directly affect market objectives ?
as government regulations have direct impact
eg)
-predatory pricing
- trade descriptions act
- advertisement of some product
what is predatory pricing ?
cutting prices to force competitors out of business
is illegal in EU and US
what is the trade description act ?
regulates promotion
cant lie about products
what can’t u advertise ?
tobacco
alcoholic drinks
prescription medicines
what is the importance of market research ?
- reduce risk of making marketing decisions
- analyse the existing positions of the business
- decide on possible marketing objectives or actions
- asses the effectiveness of marketing decisions
what is market research ?
the collection and analyse of data and information to inform a business about it market
what is primary research ?
field research
involves the collection to be first hand data and it didn’t exist before
what is secondary research ?
desk research
research that already been undertaken by another organisation and therefore already exists
what are the different types of primary research ?
- focus groups
- surveys
- reviews
- door to door
- customers feedback
- supplier feedback
- observations
- in depth interview
- telephone call
what are examples of secondary research ?
- textbooks
- national and local government
-newspapers - professional bodies
- trade unions
- academic organizations
- magazines
- international bodies
what is qualitative research ?
the gatherings of non-statistical data that gives a company an in depth insight into the reasons for human behaviours
what is quantitive research ?
the gathering of statistical data to inform the company about peoples behaviour but doesn’t identify the reasons
why is sampling carried out for primary research ?
- cant interview everyone so have to split it into similar groups
- need a sample that represents there whole market
- too expensive to ask everyone
what will affect how big the sample is ?
- accuracy
- how big the population you picking from it ( size of target )
-budget - degree of confidence in the results
what size of the sample have a better time of being representative ?
a big sample
but also still wont be 100% accurate as margin errors
what will affect the value of the sample ?
- technique used
-how carried out - size of sample
why is a representative sample used ?
as cant ask for the opinions of all potential consumers
what is a sample ?
a group of subjects that has been chosen from a larger group, the population for the sample
what are the 3 sampling types ?
random
quota
stratified
what is random sampling ?
sample is selected for the study from a population where each individual is chosen entirely by chance and has an equal chance of being selected
what is quota sampling ?
the population is first segmented into sub groups before a judgement is made in selecting a certain number of respondents that are representatives of that subgroup
what is stratified sampling ?
the population is first segmented into subgroups before respondents are randomly selected from within that subgroup
why not doing market research is a risk ?
as more chance of a fail as it may not be what the market wants
why does marketing data need to be interpreted ?
- informed decision making
- devising strategies
- understanding market
- identify sales patterns
- realistic target
- keeping up to date with market changes
- review competitors actions
- evaluation of post actions
what are the tools for interpretation data ?
correlation
confidence levels
extrapolation
time series
value of tech
IT
sales forecasts
what is correlation ?
identifying a relationship between 2 variables
what is positive correlation ?
the 2 variables move in the same direction
what is negative correlation ?
the 2 variables move in opposite directions
what is zero correlation ?
there is no relationship between the factors ?
what are the numbers of each correlation ?
strong negative- is -1
zero is 0
strong positive is +1
what may managers assume if there is a correlation ?
that the trend will carry on
so extrapolate graph and draw a line of best fit and keep the line going
what do managers need to be careful about with there assumptions for correlation ?
cautious about extrapolating too far beyond the unknown data as the trend may not continue
what are confidence levels ?
the probability that the research findings are accurate
what factors affect confidence levels ?
sampling technique
research methods
expertise of the person carrying out and analysing the research
what are confidence intervals ?
- a margin of error for sample results
-the possible range of outcomes for a given confidence level
-it means the range of values within which the business is confident that the research results will be true
when do u use confidence intervals ?
to make the estimate which has been taken from the results of the sample more useful to use
what do you do if u want to be confident that you interval contains the value of the population ?
can increase the interval level
so it gives you a wider confidence level
why can be wider confidence levels be bad ?
as it is too vague to be helpful
what is extrapolation ?
it uses data to extend and identify trends that will be in the future
-about predicting the future
when is extrapolation useful ?
when trends can clearly be identified and the market is relatively stable so it barley changes
how long in the future is it best to use extrapolation to predict for ?
a few months
- as customers desires and technology constantly change
why is extrapolation bad ?
- things can easily change
- doesn’t tend to take everything into account
-past doesn’t always indicate the future
what can 3 things can change to affect extrapolation ?
-competitors actions
- consumer tastes
- market conditions
why is technology used ?
to gather info about lifestyles of customers and products that they may buy
- so targeting and promoting to right people
why is technology valuable ?
-gather and analyse large volumes of data quickly and accurately
- track and interpret consumer spending habits
- collect consumer opinions from around the world
- encourage consumer feedback through social media review sites
- enable 2 way communication
what are ways technology can get customer information ?
- social media websites
-loyalty cards
-google showing relevant ads - WIFI signals from customers phone and track there movements
what is sales forecast ?
allow the finance department to produce cash flow forecasts so can predict sales so predict how much gonna come in and how much gonna spend
-also allow production and HR to prepare for expected levels of sales so can have right amount of machinery and stock and staff
- it helps other departments
what does time series analysis look at ?
data over time
- used to reveal underlying patterns by recording and plotting data iver time
what can time series analysis be used for ?
look for link between sales and marketing activity
what are trends ?
long term movement of a variable
what are seasonal fluctuations ?
they repeat on a regular basis
what are random fluctuations ?
have no pattern to them
- also include
major disturbances
changes in government
natural disasters
sudden unpredictable events
what can software be used for ?
- what ifs scenarios
-point-of scale
what is the problem with ‘Big data’ ?
so much data
streams so fast
so normal computers aren’t sufficient to handle it
why is ‘big data’ good ?
can draw useful correlations
so large companies investing in ways to analyse it
what is the downsides of software ?
- expensive especially if need to upgrade
- need to train staff- time consuming and expensive
-can lead to the business valuing quantity over quality- need to know what the trends mean - computer systems might not be up to handle it all and can loose info and analysation
what is price elasticity ?
measures the responsive of demand to a change in price
- it is always a negative value
what is inelastic Ped ?
change in demand is less than change in price
if a Ped is between 0 and 1
what is elastic Ped ?
change in demand is greater than change in price
>1
it is very responsive
what is the formula for Ped ?
% change in quantity of demand / % change in price
what happens when there is a positive change in price ?
negative change in demand
what happens when there is a negative change in price ?
positive change in demand
what are the factors that affect Ped ?
- branding
- income
- nature of the good
- the availability of substitutes
- tine
how does branding affect Ped ?
- firms spend time and money building up their brand image
- by creating brand loyalty firms know there customers
- know they will be willing to pay more for the product and they ca raise the prices
- Ped is lower
how does income affect Ped ?
- if consumer income higher then the issue prices become less important to consumer
- so easier for firms to raise price as the Ped is lower
how does nature of the good affect Ped ?
- a luxury good will be price elastic as demand will be more sensitive to changes in price
- necessity goods will be price inelastic as demand will be less sensitive to changes in price
how does the availability of substitutes affect Ped ?
the closer the substitutes and the more that are available the higher the Ped
how does time affect Ped ?
-longer the time period the higher the Ped
-given more time other firms have the ability to produce similar products
- customers have more chance of adapting their buying habits
what happens to revenue when you raise the selling price ?
price elastic product = sales revenue will decrease
price inelastic product = sales revenue increase
what happens to revenue when you lower the selling price ?
price elastic product =
sales revenue will increase
price inelastic product =
sales revenue will decrease
what are the problems with forecasting Ped ?
- Ped for a product is constantly changing
-very difficult to measure - competitors don’t stand still
why is is it difficult to measure Ped ?
- difficult to find info
- Ped changes over different price ranges
-change over period of economic cycle
-tastes and fashion are constantly changing
what are competitors constantly trying to do ?
to improve existing products
bringing out new products
trying to promote their products
why do we want a product to be inelastic ?
so changes in price wont be as responsive
what is income elasticity of demand (Yed) ?
how demand changes with income
- the more income then there’s more demand for some products and less demand for others
what is the formula for Yed ?
% change in quantity demanded / % change in income
what Yed does normal goods (more of a need) have ?
a positive Yed
less than 1
- means that as income rises the demand rises but at a slower rate than the increase in income
what Yed does luxury products have ?
positive Yed
more than 1
- means that the demand for luxury goods grows faster than the increase in income
what Yed do inferior goods have ?
negative Yed
- meaning demand falls when income rises
- demand rises when income falls
how does price elasticity help manufactures ?
helps decide wether to raise or lower the price of a product
- can see what might happen to sales
how does income elasticity help manufactures ?
see what happens to sales if the economy grows or shrinks
what is market segmentation ?
occurs when the market is split into subgroups of consumers with similar characteristics
- helps to identify different types of consumed and there different wants and needs
what are the 4 market segment methods ?
demographic
geographic
income
behavioural
what is demographic segmentation ?
identifies subgroups of the population based on their demographic profile or characteristics
- look at social and economic characteristics of individuals and households
what are the different profiles or characteristics of the population ?
age
gender
level of education
religion
race
family size
stages of life
