Unit 2- Management of Marketing and Operations Flashcards
Compare a Product-Led Organisations with a Customer-Led Organisation.
A product-orientated organisation is one that concentrates solely on the production process and the product rather than what the customer wants
Organisations which operate in this way are often pharmaceutical or technology based
A customer-orientated organisation is one which identifies what the consumer wants (through carrying out extensive market research) and tries to provide it
Organisations producing clothes, make-up and other low cost ‘consumer goods’ are most likely to operate in this way
define the term ‘consumer behaviour’.
consumer behaviour is about studying how individuals behave when making purchases and how this behaviour can impact on other individuals and wider society
Give the 4 types of purchasing and explain them
Habitual (routine) purchases - these require little involvement by the buyer, are bought frequently and generally fulfil a basic want e.g. milk or bread.
Limited decision making purchases - these will require some consideration by the buyer. They are still relatively regular purchases, but require greater participation in the buying process e.g. clothes.
Extensive decision making purchases - usually expensive, one-off long term purchases, which will involve detailed consideration by the buyer e.g. a car, house or holiday.
Impulse purchases - items bought without prior thought e.g. magazines, chocolate or crisps. It should be noted that items bought on impulse may include more expensive items - the disposable income of the consumer will have an impact on the type of item likely to be bought on a whim.
Give the steps of the marketing process
Identifying
Anticipating
Satisfying
How do we research consumer behaviour
EPOS- The till, this gives us info such as what is sold, how much of that is sold and on which days.
This allows you to change the layout of the store to encourage people to buy more, know when to have stocks of certain items available
Loyalty Cards- Gives the demographic, where they live, what they do, date of birth, how often they come, when they come to the shops, their purchasing trends
Allows you to do targeted marketing, sending vouchers on birthdays, for items they frequently buy etc…
discuss the role of marketing in a business and its role in the achievement of business objectives.
to increase sales revenue and profitability;
to increase or maintain market share;
to maintain or improve the image of the business, its brand or its product;
to target a new market or a new segment of the market;
to develop new and improved products.
What are the 2 types of market research
Field (primary)- where a researcher obtains information first-hand e.g. by interviewing people or issuing questionnaires. This provides primary information which is up-to-date, collected for the specific purpose required and is not available to competitors.
Desk (secondary)- where a researcher uses secondary information which can be gathered from a wide range of sources - for example, from the internet, published research or the media. Secondary information is much cheaper to collect as it already exists, but because it has been collected for another purpose it may not be relevant to your needs. It may also contain bias, which could invalidate any conclusions drawn from the data.
What is the difference between a core product and an augmented product
A core product will satisfy the basic needs of the consumer.
But to make the product more competitive and attractive, additional features are often added. This is known as an augmented product.
Today’s customer looks for more in a product than the basic function it fulfils.
For example, shampoo comes in a wide range of variants. All shampoo cleans hair (Tesco Everyday Value shampoo will do this for a low cost).
However, there are many designer brands available which have been developed by well known stylists and these shampoos offer additional benefits - for coloured hair, for greasy hair, for dry hair and so on.
These augmented products allow the customer greater choice and command a higher price.
outline the level of sales and profitability that can be expected at each stage of the product life cycle
Development- This is where a product is researched, designed and a prototype will be made. A large percentage of products will never progress beyond this stage.
Sales- Zero.
Profit- Zero.
Introduction- This is the launch stage of a new product. Sales- Initially low, as few consumers know about the product at this stage.
Profit- Zero.
Growth- Where consumers are becoming more aware of the product and competitors may start to enter the market.
Sales- Begin to increase due to increased consumer awareness.
Profit- Low.
Maturity- The product has become commonplace on the market and competition will be increasing and established.
Sales- of the product will be high.
Profit- Good levels of profit can be made at this point in the life cycle, as there will be little advertising required.
Saturation- There will be a large number of competitors and not all products will survive. Consumer tastes may change and demand falls.
Sales- will level out.
Profits- Will remain high, however the company will need to invest in additional advertising to remind consumers that the product exists.
Decline- The product is no longer desirable and is likely to have been replaced by a newer version or technology.
Sales- Will fall until the product is withdrawn.
Profits- Will decrease rapidly until the product is withdrawn.
describe how the product life cycle can be extended to prolong the life of a product
7 P’s
explain the importance of creating a product portfolio
This means that as you work on improving and developing the problem children and stars you can rely on your cash cows to prop up the business.
describe the role that ‘price’ plays in the marketing mix
Price is defined as the amount a customer is prepared to pay (and actually pays) for a product.
When setting a price, a producer has to take the following into account.
The cost of production
How much profit the producer wishes to make
The quality of the product
The amount the consumer is willing to pay
The amount being charged by competitors
The target market for the product
Low price
A price which is lower than that of similar products on the market. This is often seen in shops like Aldi, who claim a ‘no-frills’ approach.
Premium price
A price which is higher than that of similar products on the market. Used to project an image of quality or exclusivity by premium and designer brands.
Competitive price
Where prices are broadly in line with those of your competitors. This is usually seen with very price sensitive products/services such as fuel. Organisations use other methods of competition - for example, offering loyalty points for purchase.
Skimming
Where a high price is set initially probably for a unique, technologically advanced product.
This strategy is likely to be used only in the introductory or growth stages of the product life cycle.
The high price allows the company to recoup the initial investment in the product and become profitable relatively quickly.
Promotional pricing
Prices are lowered for a short period of time - this can be either on specific products sold within a store for a limited period of time, or a general ‘sale’ where the majority (or all) the products within a store are reduced - as seen in the Next sale for example.
Penetration pricing
Where a low price is initially set to enter a market where there are a lot of competitors. Once the product is established, prices can be raised to match those of the competitors.
This strategy is seen only in the early stages of the product life cycle.
Destroyer
An artificially low price is set to force competitors out of the market.
Only viable for larger companies who have reserves of capital to support the loss-making activity. This is an illegal practice.
Loss leader
This is where an organisation chooses a product to sell at a loss to encourage customers to use their shop/service.
The idea is that once the customer has entered the premises they will spend money on other things, allowing the organisation to make an overall profit.
for example, a restaurant offering a deal on 2 main courses hopes that the customers will order additional courses and drinks.
Channels of Distributions
Manufacture—–> Wholesaler—–> Retailer—–> Customer
Manufacture—–> Wholesaler—–> Customer
Manufacture—–> Retailer—–> Customer
Manufacture—–> Customer
Benefits of Wholesalers
Good distribution links and relationships with retailers.
By breaking up bulk and taking care of distribution problems they free the manufacturer to concentrate on production.
The wholesaler can bear the cost of storage - which in part is passed on to the retailer.
Disadvantages of Wholesalers
the wholesaler needs to make profit, so the retailer will pay more for the goods than they would by buying directly from the manufacturer.
the wholesaler is often described as the ‘middle man’ and many retailers would prefer to buy directly from the manufacturer if possible - however they cannot buy in large enough quantities to make this possible, hence the added cost of using a wholesaler.
Benefits of Retailers
Offering a range of complementary products to the public. For example, a convenience store will sell tea, coffee, milk and sugar - everything the customer is likely to need for their making a hot drink.
Providing information to consumers about products via displays, signs and trained staff.
Storage and display of goods.
Physically selling the goods to the public.
