Unit 2 Flashcards
What is a good?
A good is anything that might satisfy a want or a need- they are physically used
Examples of goods
They are mainly physical - Clothing, automobiles, computers, and food
Marketing objectives of goods
Marketing objectives that focus on the tangible factors of goods. Such as making decisions about product attributes, packaging, branding, labelling
What are services?
Services are intangible such as banking, hotels, or home repair services (more like action for money)
Marketing objectives of services
Tailored towards competitive differentiation, high quality services, and finding ways to increase service productivity
Marketing in For-profit organisations
They use marketing to let potential customers know about their services and their benefits, with the objective of increasing sales, profits, and/or increasing market share
Marketing in Non-profit organisations
They use it to purely raise awareness of an issue and to raise financial public support for a cause
Commercial marketing
Focuses on a customer’s needs or wants
Social marketing
Focuses on SOCIETY’S needs and wants
The two ways in which a new product can be developed:
Product orientation or market orientation unit
What is product orientation based on?
The assumption that there will always be a market for the product that the firm makes
Product orientation is driven by
Technological innovation rather than a customer’s needs - it rests on the belief that if an innovative products is produced to a good quality - people will buy it
Examples of product orientation
Pharmaceuticals, electronic industries
What is market orientation based on?
The satisfaction through market research and market analysis - they male their decisions based on what customers need and want
The more common orientation method in the 21swt centenary:
Market orientation because more and more companies are becoming more accomodating to customer preferences
Mass marketing
When a company tries to communicate to the largest possible audience - who probably have a lot of different wants and needs
Example of mass marketing
Tv commercial, bulletin board
Niche marketing
When a business communicates with small groups of either potential or existing customers that have similar yet specific needs and wants
There is a lot less….
Competition in niche marketing
Marketing mix
Product, Price, Promotion, and Place
Peter Drucker’s theory was….
That marketing should not be though of as a seperate activity functioning individually from another sector of the business
What is market share?
The percentage of total sales volume in a market captured by a brand
Revenue market share =
Sales revenue of the organisation (divided by) sales revenue of market
Unit market share =
Units of sales of organisations (divided by) total unit sales of market
It is important to….
Define the market being studied when analysing market share data
Market segments
Groups of people that share one or more of the same characteristics.
The 5 steps of the marketing planning process:
Marketing audit, marketing objectives, marketing strategies, monitoring and reviewing, evaluating
Marketing Audit
A review of current marketing activity, with the aim of enhancing the marketing performance of a company
Examples of marketing audits:
SWOT and STEEPLE analysis
Marketing objectives
Define what a company wants to achieve through its marketing activities
Examples of marketing objectives
Increased market share or diversifying into a new market, objectives should be SMART
Marketing Strategies
Strategies that are used in order to achieve the marketing objectives - (The marketing plan and marketing mix will outline the marketing strategies to be adopted)
Monitoring and reviewing
This involves outlining controls that will be used to monitor progress and to check and asses that targets are being met
Evaluation
Measuring the results and outcomes of a company’s marketing activities against the original marketing objectives set
Why are evaluations important?
Evaluations are significant because they help with decision making and planning for the next marketing audit
A perception map
Lets companies trace or plot their customer’s views and perception of the products onto the ‘perception map’ - usually two variables are plotted
How are perception maps created // used?
The most important attributes that influence consumer choices are considered, marketers can decide on their own position in relative to competitors, It identifies any gaps within the market so the company can position itself
Examples of primary market research:
Surveys, Interviews, Focus Groups, Observations
Examples of secondary research:
Academic journals, Media articles, Market analysis, government publications
Quantitative research:
Information that involves a numerical or measured value. Closed and rating scale questions on surveys that can be measured
Qualitative research
Descriptions, feelings, perceptions, data which can be observed yet not measured. Open-ended questions and focus group research
Random sample
Every member of the population has the same probability of being included within the sample - it produces fair and unbiased results
Cluster
Used to avoid problems in having to collect data from populations that are geographically scattered, populations can be divided into clusters. A cluster is then chosen at random and then people are chosen at random from that cluster. This is good for a business that operates in multiple geographic locations.
Stratified
This involves dividing up the population into different sub groups, (male, female, age, ethnicity) and then choosing people from these sub-categories at random. This method ensures a more proportionate or representative sample. It helps make sure an appropriate number of males and females are gathered.
Difference between stratified and cluster
With a stratified, you are initially divining up the population into groups as different as possible but with cluster sampling you are dividing the population into groups as similar as possible
Quota
Does not choose people at random, just a designated number of individuals from a sub group. This could be the first 10 people to walk past a shop, or the first 5 males and 5 females to complete an online survey. This method can make sure the right amount of males/females are gathered.
Snowball sampling
When there is no access to a sufficient amount of people with the characteristics you are looking for. You request referrals from initial respondents until you reach the desired amount. This can be used with quota sampling to reach a desired quota.
Convenience sampling
Rather than at random, people are selected based on availability. This produces the most inaccurate and biased results.
Benefits of sales forecasting
It is a useful forecast for budgeting, or working capital management (activities that repeat regularly each year), helps with better stock management so businesses know how much stock to hold on hand, opportunities for businesses to tap into customers changing preferences and buying trends and adjust their marketing mixes
Limitations of sales forecasting
Accurate forecasts of cyclical and random variations are difficult to predict, the forces influencing the trend and the patterns may change, takes no account of changes beyond control of a company such as government policies, pressure from competitors, changes to laws etc, It is a very complex activity
What is the product lifecycle?
The progression of a product’s sales over its lifetime
The four stages of the product life cycle
Introduction, growth, maturity, decline
What is the best known method of analysing a product portfolio to see its balance?
The Boston consulting group (BCG) Matrix
The two variables of the Boston Consulting Group (BCG) Martix
Relative market share (x axis) Market growth rate (y axis)
How does the Boston Consulting Group (BCG) Matrix fit in with the product lifecycle
The four categories in the matrix equate to the four stages of the product lifecycle
A question mark
Recently introduced product which has not yeast established itself, hence why it is hard to predict it’s future (low share, high growth)
Dogs
(Low share, low growth) most people remove dogs from their product portfolio as the drain resources, but in same cases they can still make some revenue. EG: If a newer car model is out, some people will still need new parts for their older car even if the model is hardly selling
Cash Cows
(high market share, low growth rate) Basically the maturity stage of the PLC, well established products, dominant positions in the market that deliver a significant amount of income, and is not costing the business much to maintain
Star
(High share, high growth) They have rapid growth and dominant market share, they can be seen as market leading products, and they require a lot of investment to keep their position and to lead over competitions. It is hard to tell whether the market will continue to grow or go down
The aim of the Boston Consulting group (BCG) Matrix
To allow an organisation to plot their products on the Matrix to see whether they have a healthy product portfolio. An unbalanced portfolio would have too many dogs/question marks, and not enough stars/cash cows
The four strategies that a business must decide whether to go forward with
Build, Hold, Harvest, Divest
Build (strategy)
Question marks or products in the introduction stage that need to be built in order to have them grow into stars, This requires a high level of funding
Hold (Strategy)
A firm will be keen to maintain the market position of a star product, therefore promotional costs will be high so as to differentiate itself
Harvest (Strategy)
A firm plans to cash in on its ‘crop’ (mature product), to ‘milk its business’ hence why this is called a cash cow
Divest (Strategy)
Made appropriate for dogs or products in the decline stage, as its market is not growing
Cost plus pricing
Simple approach to price setting - businesses add a percentage mark up onto the cost of the product. This method is used by most retailers / wholesalers
Example of cost plus pricing
Phone cost = $50
Add 50% mark up to price of 1 phone
Phone price = $75
Penetration pricing
When a product is priced low to attract more customers and discourage competitors. This strategy enables the firm to penetrate or capture a large share of the market quickly.
Example of penetration pricing
Sony subsidized the cost of its Play Station 3 hardware to $299, in order to gain market penetration, losing up to $300 per console
Skimming Pricing
When a product is priced higher to make optimum profit while there is little competition. The high profit resulting from this strategy will enable Research and Development costs to be recovered quickly.
Example of Skimming Pricing
When Philips launched the first flat screen televisions, each sold for $15000
Phycological pricing Strategy
Sellers consider the psychology of prices and not simply the economics. It takes account of customer’s perception of value of the product.
Example of they phycological pricing strategy
$4.99, $4,999.99
Loss Leaders
Products priced at very low levels to attract customers. The company selling the product makes a ‘loss’ on each product sold. It is expected that the loss made on a loss leader will become compensated for by profited on other products.
Example of loss leaders
Supermarkets
Price discrimination
When a company charges members of different groups of consumers, different prices for the same product of service
Example of price discrimination
Cheaper tickets for 65+
Competitive (Predatory) Pricing strategy
Used by companies to undermine sales of rivals or to warn rivals not to enter a particular market. A predatory pricing strategy is illegal in many countries, (it is difficult to prove whether the low prices are the result of legitimate price competition or a deliberate act to eliminate the competition.)
Price leadership
Used when customers and other firms agree there is one dominant firm in market share or status. The dominant firm sets its prices and the competitors follow. If the dominant firm raises prices other firms follow, this results in higher profits as customers would have to pay more. This requires government regulation to protect customers.
Things to consider when looking at pricing strategies:
The nature of the product, customer, and competition, short and long term impact on sales and profit, target market and revenue, financial position of the business
Promotion is….
An attempt by marketers to inform consumers about a product and persuade them to purchase it
AIDA Model
Attention, Interest, Desire, Action
Above the line promotion
The use of media for marketing communication with customers
Examples of Above the line promotion:
TV, internet, magazines, radio, billboards, cinema
Below the line promotion
Not dependent on the media, refers to techniques when the marketer has some kind of control. Often, customers are offered short term purchase incentives often referred to as sales promotion techniques
Examples of below the line promotion:
Loyalty cards/programs, Money off coupons, buy one get one half price / free, competitions, demonstrations, Sponsorship, public relations
What is a promotion mix?
A combination of above and below the line promotion tools, balancing them in a structured and planned out way
The five elements of the promotional mix
Advertising, personal selling, Sales promotion tools, PR, Direct marketing
Advertising
A tool used by marketers to send messages via the media to inform or influence the people who receive them eg: radio, tv, newspapers
Personal selling
Face to face contact between buyer and seller, salesmanship, buyers have the opportunity to ask questions and raise queries, Sales people adjust their sale messages to suit the buyer
Sales promotional tools
Techniques designed to stimulate customer purchases shot term. EG: coupons, samples, and demonstrations. They are used to dramatise products to boost sales
Public Relations (PR)
Refers to the activities designed to give an organisation or its products/service an image amongst all stakeholders (existing and potential customers, employees, shareholders, local community, government) PR aims to give the business the best image possible
Direct marketing
When no intermediaries are involved in making a sales transaction. Customers’ mailing lists are used to tell what is on sale, how long and at what price. EG: Telemarketing, use of QR codes
How does social media enhance marketing?
Social media builds a relationship and conversation with customers and possibly a movement - promotion through traditional media is only about delivering a message
Percentage of companies that use social media
40%
Distribution
The process of getting goods from producers to customers, ensuring that products and services are available when required
Why is there distribution?
Products have to be physically moved from where they are produced to a convenient place where they can be bought by customers
A Company’s channel decisions
Directly effect every other marketing decision
A company’s pricing depends on
Whether it uses mass merchandising or high quality specialty stores
Distribution channels
Direct selling to consumer, single intermediary channel, two intermediaries channel
Extended Ps of Marketing
People, process, physical evidence
All Ps of marketing
Product, Price, Promotion, Place, People, Process, Physical evidence
Use of the extended Ps
FOr the marketing of intangible products/services
People in the delivery or services
Create a correct impression, Staff who don’t keep customers waiting, Providing useful feedback to customer quieres/complaints, appropriately trained, well motivated
Reference to process in the marketing mix
The ease of doing business with
Factors of the best processes in the marketing of (goods)/services include:
Flexible payment methods, waiting time, customer services (attitudes of staff, degree of attentiveness), After sales service/care (warranties, help desks, maintenance of equipment)
Factors of physical evidence in marketing
Clean reception area, staff attire, good ambience, soliciting customer feedback, online experience, product packaging, testimonials, business referrals
Physical evidence in the marketing mix
Proof that allows customers to see for themselves the wuality of the services being provided
Functions of E-Commerce
Business to Business, Business to Consumer, Consumer to Consumer
Business to Business (B2B)
Selling/buying of goods and services to/from other businesses
Business to Consumer (B2C)
Selling of goods and services directly to final consumers based on orders placed online through official company websites
Consumer to Consumer (C2C)
Selling of good and services occurring directly between two Consumers usually through a third party
Advantages of E-commerce
Reaching a wider customer base, low set up cost (if only e-commerce is used, save money on staff and rent), If e-commerce is added to an already functioning organisation, the cost of the technology usually isn’t high, transportation costs are low
Disadvantages of E-commerce
Security issues (credit/debit card info / personal info stolen by hackers), Some people do not feel confident shopping electronically, Some customers are put off by the intangibility and reduces their demand
Reasons to sell online:
Global online sales have increased by 17%, E-commerce sales have crossed $1 trillion, 20-30 year olds do a quarter of their shopping online, China’s online shoppers total to 220 million
Methods of entry into international markets
Exporting, Franchising, Licensing, joint ventures, acquisitions, subsidiaries
Exporting
The simplest way of entering a market overseas, manufacturing products overseas
Franchising
Noticed in service industries, requires one business selling a license to others, the license allows one firm to use another’s name, product, or service, in exchange for an initial payment and royalty
Licensing
A business arrangement when a company gives permission to a foreign company to manufacture its product on a royalty basis. The goods do not have to be move abroad the company sends representatives to the foreign producer to help set up the production
Joint Venture
A partnership when companies from 2 or more countries take on a major project of new venture. It is a popular method for countries that want to go into business with other countries. It optimises the comparative advantages of the two companies, resulting in a ‘synergy’
Acquisitions
Firms acquiring another firm in foreign countries as a mean of penetrating foreign markets - they allow firms to have full control over their foreign businesses and expand foreign market share
Subsidiaries
Establishing ‘new’ operations in foreign countries to produce and sell their products. The can achieve higher success rather than acquisitions as operations are tailored to the firm’s exact needs.
Foreign direct investments (FDIs)
Investment made by a company or individual in one country in business interests in another country
Market orientation focuses on
Customers (and their needs/wants)
Product orientation focuses on
The product rather than a need (products that a business is good at developing)
Social marketing is
Promoting specific behaviours from society ‘social good’. EG: encouraging people to quit smoking
Market leader
Firm in a certain industry with the highest market share
Market size
Total sales of all businesses in a market
Marketing influences production because….
Depending on how well a product is marketed and received, it may be more or less popular effecting the costs and rate of production
Advantages of Market orientation
Reduced risk of failure, easier to respond to market change, easier to anticipate changes, easier to compete with new competitors
Limitations of market orientation
Expensive to conduct research, might be difficult to meet constantly changing customer needs, uncertainty of the future effects research
Advantages of product orientation
Associated with high quality products, niche market, succeeds in industries where speed of change is slow, company has control over its activities
Limitations of product orientation
Risk of failure because it ignore customer needs, spending money on research nd development and not consumer needs might not lead to ideal results
What to consider when interpreting market share
Different ways of measuring (leads to different results), type of product, change in time period, economic changes, value and quality gives different results
Viral marketing
When an idea spreads exponentially through social media - it could be spread by word of mouth yet enhanced through media and technology
Social media marketing (SMM)
Internet marketing that uses social networking websites as a marketing tool - producing content that users will share on social media to increase brand exposure - gaining attention through social media
Guerrilla Marketing
A low cost advertising strategy that focuses on high energy and imagination to grasp attention of the public on a personal or memorable level
Marketing plan
A detailed document about the marketing strategies that are developed to achieve a company’s objectives
Marketing budget
Finance required to fund the overall marketing strategy
Detailed marketing actions
Information on the specific activities that are to be carried out
Benefits of marketing planning
Identifying problems and seeking solutions, Improving success chances, Improves coordination with other departments, Insures resources are not wasted, improves employee motivation
Limitations of marketing planning
Becomes Outdated quickly, Time consuming, The company may fail to prioritize objectives
Segmentation
Process of dividing the market into groups of consumers with similar characteristics to meet their needs and wants
Point-of-sale promotion
research into customer buying behaviour in retail stores
Advertising can be
Informative or persuasive
