Unit 2 - Learning aim A Flashcards
What is marketing?
How a business promotes themselves to try and attract customers
What is the purpose of marketing?
- to attract customer awareness to the business, products and services
- to create brand awareness and improve market share
- to make customers willingly pay more for the same/similar product or service
What are the main principles of marketing?
- anticipate demand
- recognize demand
- stimulate demand
- satisfy demand
What is anticipating demand?
Attempting to estimate and anticipate the demand that could be generated by a marketing campaign is a key purpose of marketing
It could be difficult to anticipate demand but various methods can be used t make estimates more accurate, such as?
- looking at impact of past marketing campaign
- looking at results of market research
- looking at demand for previous products
- looking at demand for competitors products
- looking at impact of competitors marketing campaigns
What is recognizing demand?
Seeing whether the demand has increased or not following the marketing or marketing campaign
How to recognize demand?
- business must do its best to meet rising demands and capitalize on success of their campaign
- not only may product sales increase, but may also lead to increase in brand awareness and recognition
- essential to recognize demand to ensure new customers expectations are met which can lead long term brand loyalty
What is stimulating demand?
Not just attracting customers, trying to influence existing and new customers to want to buy into this new business, idea, product/service
How to stimulate demand?
- reduce products price at launch
- exclusively distribute product to a particular store, or to loyal customers and members
- only release a limited quantity of product
What is satisfying demand?
The business continues to keep the demand needed so that customers aren’t disappointed
Ways to satisfy demand?
- carry out new market research
- compare and contrast your business to others in the same market/industry as you
- continue to be innovative
Ways to understand customer needs?
- use mystery shopper to see how customers experience their shopping with you
- collect and analyze data on customer’s buying behavior within their industry using a loyalty scheme
- conduct primary research
What are the stages of developing new products?
- idea generation
- product development
- development of marketing strategy
- test marketing
- product launch
What should happen when customer needs change?
- more choice available
- businesses product portfolio increases/improves
- feedback is sought from customers
- react to competitors regularly
How to improve profitability?
- sell more
- attract more customers
- reduce costs
- find cheaper suppliers
- get brand awareness
- maintain customer loyalty
What is market share?
The number of customers that a single business is able to attract
How do you improve market share?
- attracting more potential customers
- keep existing customers happy
- get customer loyalty
- get more power over their competitors
- increase brand recognition
What is diversification?
Entering new markets to spread risk?
Areas to consider with diversification?
- do research to avoid more risk in future
- launching new products/services takes time and cost
- might cause a businesses budget to be used/not enough
- other competitors might have better budgets to diversify quicker
Why does building a brand help with customer loyalty?
- helps customers stay with you and keep purchasing
- makes business different to competitors
- can help a business to develop their product portfolios
- can create an emotional reaction from customers about what they believe the business or brand to be like
- customers prepared to pay more for the branded products/services
- adds value to the business
- can lead to loyalty schemes where customers are rewarded for their repeated purchases
What is brand awareness?
Customers being able to easily recognize a specific brand
What is a niche market?
Typically populated with small to medium sized businesses as they are too small to attract the interest of larger businesses
What are features of a niche market?
- sell products which are aimed ay a small and specific segment of the market
- demand is generally high but the amount of customers in the market is limited
- includes food products such as vegan or gluten free options and specialist software such as sage for accountants
What is a mass market?
As a business gets bigger then they start to diversify, expand their product range and start producing to a bigger target market
What are features of a mass market?
- sell products aimed at the whole market with a much wider range of customers
- demand is a lot higher than those in the niche market
- includes a lot of technological products such as PC, mobile phone or TV
Why use market segmentation?
- to identify what products/services customers buy
- how customers use those products
- to find how much customers are willing to spend on product/services
- what decision making takes place
- what values/opinions customers have and why
What is branding?
The way businesses build their reputation by the name they use, the colors they use and the logo/packaging they have
What are the benefits of a brand?
- can cause a more positive reputation
- get customers to think/feel a certain way
- can develop brand personality
- allows the business to connect with customers
- allows the business to have a brand story, what are they about/achieve
What is a unique selling point?
Refers to the elements and characteristics that make one business or its associated products different to its competitors
What are the benefits of a USP?
- attract customers
- customer loyalty and repeat purchases
- look special/stand out
- competitive advantage
- improve reputation
What will the size of the business lead to?
- What marketing the business will carry out
- How much they have to spend (budget)
- Time they have to do the marketing
What are the 4 business sizes?
Micro - 9 or less employees
Small - 10-49 employees
Medium - 50-249 employees
Large - more than 250 employees
The businesses budget will…?
- not be unlimited
- usually be small for a small business
- usually large for a larger business
- be controlled by one/range of people (depending on businesses size)
- can change year to year
- also take into account the businesses expenses
What are the reasons specialist staff would be needed?
- operate machinery
- train others
- give advice/expertise to others
What are specialist staff?
A person that has specific skills and would be hard to replace if needed
The roles of specialist staff might be different depending on: sole trader business?
Common for owner to do all marketing yet they may have no real skill set or experience
The roles of specialist staff might be different depending on: micro business?
May be responsibility of 1 member of staff to do all marketing, however they may not be a marketing specialist, more so the best person for the job within that business
The roles of specialist staff might be different depending on: small business?
May be a number of people who are responsible for marketing or there may be someone who recruited as a marketeer who is specialist, qualified and has previous experience
The roles of specialist staff might be different depending on: medium business?
Common to have a marketing department with a number of marketing specialists dedicating to improving the brands image and increase sales
What is internal influence?
Something that happens inside the business that could affect the operations of the business
What are the internal influences a business needs to consider?
- cost of campaign
- availability of finance
- experience of staff
- size and culture of business
What does political mean?
A business must be aware of the internal and external governments regulations that affect business and marketing
What are political factors to consider?
- regulations of pricing, hiring, production, tax and environmental regulations will likely differ from those in the UK
- Brexit will impact the way many businesses conduct their marketing
- competition overseas if importing/exporting products
- monetary and political stability are also key factors that multination’s should take into consideration, political stability provides businesses with the opportunity to grow and thrive. Political instability carries a set of risks, such as expropriation within which a foreign government can take ownership of a business’ assets
What does economic mean?
External influences that lies largely outside the control of a business and how this could affect them positively/negatively
What are economic factors to consider?
- how different industries are impacted according to economic influences
- how the overall consumer income is currently at, spending increases and decreases
- change in economy
- predictions must be made about economic factors such as interest rates, inflation, exchange rates, nature/size of workforce and availability of resources
- there is info available to make educated predictions about what part of the cycle the economy is in and how best to react to that
What does technological mean?
Any use of electronic devices or ICT being used, keeps advancing making things more possible
What does social mean?
External factors that affect what customers think/perceive the business to be acting like
What are social factors to consider?
- large variations between cultural factors and how countries and businesses are expecting to deal with this
- businesses need to understand who their customers are and what they need
- cultural and social factors of target market, might lead to business having to make different decisions
- cultural aspects that businesses need to overcome are aesthetics, education, law and politics, language, religion, social organizations, technology and material culture, values and attitudes
- social factors that businesses need to identify/understand include reference groups, demographics, wealth, religion, buying habits, education level, family size and structure, role and status in society and population density
What are technological factors to consider?
- impacts communication, media and distribution channels
- can lead to products becoming obsolete
- can have unpredictable impact on businesses
- products lifespan becomes shorter
- opportunities for innovation are more possible
- online presence of businesses has become more prominent and important
What are legal factors to consider?
- changes to legislation can hinder marketing /opportunities that the business has
- business should ensure they meet any lows to avoid any trouble in the future
- ‘Sales of Goods Act 1979’ states businesses should sell goods that are as they are described and of satisfactory quality
- false advertising is misleading, description of product should be accurate
- marketing activities are regulated by Advertising Standards Authority (ASA), promotes and maintains the British code of advertising, sales promotion and direct marketing, rules for businesses to follow when marketing to ensure its legal, decent, honest and truthful
- if advertiser breaches code of practice the ASA can insist it approves advertising before being released to public, refer advertise to office of fair trading, ask TV stations, radio stations and publishers to withdraw the advertising
What does legal mean?
Rules and regulations that apply to a specific country that have to be adhered to
What does environment mean?
Area that situates where a business is located or operated from, business should pay particular attention to ensuring they don’t pollute/endanger wildlife etc…
What are environmental factors to consider?
- can lead to changes in social trends and opinions
- ethical marketing decisions and efforts should meet and suit needs of customers, suppliers and business partners
- unethical behavior includes business activity such as price wars, selective advertising and deceptive marketing which can negatively impact a company’s relationships with its consumers and suppliers
- recent trends show that customers prefer ethical companies and as a result, ethics itself is a USP or a component of a corporate image
- common for a business to advertise and promote its ethical activities due to the increased emphasis on business ethics
