Unit 2 Managing a Marketing Campaign Flashcards
Name 6 aims a business might have when carrying out marketing.
- To understand its customers needs
- To develop new products
- To improve profitability
- To increase their market share
- To diversify into new areas
- To increase their brand awareness and brand loyalty
Explain how marketing improves profitability
Profitability is profit efficiency
So marketing needs to lead to reduced costs or increased price
Explain how marketing can lead to reduce costs
If you understand customer needs, lower product quality might be possible
Explain 3 ways marketing can lead to increase price
- If you build brand awareness, this adds value so you can charge a higher price.
- Or if you develop new products this can add value.
3.Or if you increase market share, fewer competitors means you can increase price
When might a business want to diversify?
Diversification is spreading risk.
So diversify if you see risk ahead.
Risk might be seen late in the product life cycle.
Describe the product life cycle?
What is brand loyalty?
A long term commitment by your customers to make repeat purchases of your brand
Give some evidence that brand loyalty is important.
According to the Harvard Business Review (HBR), businesses with high brand loyalty scores, grow revenue 2.5 times faster and deliver 2-5x the return to shareholders over the medium term.
Give 2 benefits of brand loyalty?
- Loyal customers purchase more often (90% according to the HBR) therefore sales revenue is higher.
- It costs much less in promotion to retain customers than to switch new customers to buy from you.
What is the most important feature to the loyal customer?
Quality. The product or service has to be of good quality and consistently delivered.
Which of the 7Ps delivers quality?
Product.
Product delivers quality.
Quality is important to loyal customers.
Loyal customers bring the highest revenue.
What is a diversification strategy?
A new product, to a new customer
What is a product development strategy?
A new product to the existing customer
What is a market development strategy?
The existing product launched to a new customer
Which marketing strategy requires the least resources?
Product development because it builds on brand loyalty
Which marketing strategy has higher risk?
Diversification and market development but they also carry higher possible returns
How can you define market share?
your sales divided by total market sales x 100
Define branding
Creating a unique identity
To distinguish you clearly from your competitors
Define a mass market?
A product that appeals to a wide range of customer types.
What is a niche market?
A product that has been adapted to fit the needs of a specific target market
Describe 2 benefits of a niche market?
- It closely meets the needs of the customers so customers are highly satisfied and loyal.
Loyal customers = low cost of marketing.
Loyal customers = higher revenues - The market is less competitive so lower costs of marketing.
Describe 2 benefits of a mass market
Larger overall market means higher potential sales if the brand is recognisable.
Cost effective for a large organisation due to economies of scale.
What is meant by USP?
Unique Selling Proposition
It is your competitive edge
It is the offer that your competitors can not replicate
Describe 4 steps to discovering your USP?
1.Understand what your customers want
2.Understand your own business values and strengths
3.Understand where your competitors sit in the market
4.Tailor your 7Ps to deliver the USP
How might a business use market segmentation?
- Identify if buying habits change between customers & group them
- Define what the segments needs and wants
- Adapt the 7Ps:
eg adapt the product, the message, the price, how to promote etc
Give 4 types of market segmentation
BLID: Behaviour, Location, Income, Demographic
What sub-groups can be used in demographic?
Demographic means relating to the population:
Age, Religion, Gender, Education, Race, Life stage.
Give 1 way of explaining the life stages of a family
bachelor stage, young marrieds, full nest, empty nest and sole survivor.
Describe behavioural segmentation
It groups customers according to their behaviour when making purchasing decisions:
1. Occasion they are buying for
2. Reasons for buying the product
3. Time when they purchase
4. Frequency of purchase
Why not to use a mass market strategy?
Profitability is low because of the high costs of mass marketing.
Competition will be high in a mass market so you have to reduce your price, lowering profitability.
Name 3 internal constraints on a business’ marketing campaign
1.scale of the business - no need to mass market if you can only reach local customers
2.budget - you can only spend what you can finance
3.expertise - what marketing does your staff know about. Is there a dedicated marketing team who can focus solely on delivering the strategy?
What does PESTLEE or STEEPLE stand for?
Political, economic, social, technological, environmental, legal and ethical
Politics - how does having 3 prime ministers in 9 months lead to low risk marketing strategy in 5 steps?
1.We’ve had Johnson, Truss and Sunak in the last 9 months.
2.This creates political uncertainty as each Prime Minister sets a new direction for the country.
3.Businesses hate uncertainty.
4.They can’t plan, if the plan keeps changing.
5.For marketing, they won’t take risks, so they will scale back ambitious plans and stick to marketing that is low risk.
Politics - how does having 3 prime ministers in 9 months lead to low cost marketing in 5 steps?
1.Sunak, Truss and Johnson in the last 9 months created uncertainty for the markets.
2.This uncertainty led to our exchange rate falling by 6% against the Euro in 1 year.
3.This led to the cost of imports of raw materials going up for businesses.
4.This meant their profit margins were squeezed.
5.They had to reduce costs which has reduced the marketing budgets.
Politics - how does the war in Ukraine lead to low cost marketing?
1.Businesses are recording a 20-30% energy price rise.
2.This is driven by reduced energy supply resulting from the Ukraine/Russia war.
3.This has meant a squeeze on profit margins.
4.They had to reduce costs which has reduced marketing budgets.
5.May need to focus on cheaper marketing strategies such as building loyalty.
What has been the fall in the value of sterling against the Euro in the last year?
-6%
Name the 3 prime ministers in the last 9 months
Sunak, Truss, Johnson
How much have business overheads risen by in the last 12 months?
20-30%
How much is the rate of inflation in the last 12 months?
10%
How has the Bank of England rate of interest changed in the last 12 months?
up by 3% in last 12 month to just over 4%
How is the increase in Bank of England interest rate effecting marketing?
- Interest rates have risen by 3%.
2.Borrowing costs have gone up for consumers and businesses.
3.This has reduced consumer and business spending.
4.Sales revenues are falling of most goods.
5.Marketing budgets are tight.
How is inflation impacting on marketing?
1.Inflation is at around 10%.
2.Business costs are going up, such as wages.
3.Less to spend on marketing.
4.Customers are willing to spend less as their budgets are tight.
5.Marketing is even more important to retain (more efficient) customers.
Name 2 environmental media influencers
1.Greta Thunberg and David Attenborough have brought the importance of the environment to people’s attention.
How can a business be more environmentally friendly?
Use electric vehicles
Reduce packaging
Use recycled packaging
Source locally
How important are environmental issues to marketing?
Depends on the segment ie customer wants and needs.
How does the environment influence marketing?
Brand - competitive advantage: green credentials
Product - packaging no longer used to convey brand
Product - product features such as local suppliers
Which segments might want environmental concerns in their marketing mix?
It COULD be important to the following segments:
Demographic - age?, life stage eg full nesters
Education - degree level segment?
Religion - beliefs and values around environment
Less important if facing cost pressures eg full nesters, low education/low skill/low wage
What percent of the population reported the environment as important in the 2023 ONS survey?
57%
Describe Gen X
Age 43-55
Spanned new and old technology
In-store shoppers
Cautious
Describe Millennials
Age 28-43
First digital natives
Media savvy and media sceptical
Short term spenders
Describe Gen Z
Current twenty-somethings
Digital natives
Create online communities
Personalisation preferred
Sustainability is important
What % of the UK has 5G?
12% of the geographical area but 68% of population.
Therefore digital marketing content access will vary by location.
How has VR influenced marketing?
Use of VR to model what clothes or furniture might look like is personalised.
What percent of UK households have all 3 streaming services?
20% but this might fall with cost of living
How much tv per day do 16-24 year olds watch?
53 minutes, down 66% in last 10 years.
How does Consumer Protection law impact marketing strategies?
Marketing must not:
include false or deceptive messages
leave out important information
use aggressive sales techniques
How might the EU Withdrawal Act impact a business?
Opens up new markets outside the previous trading agreement
Labelling still has to comply with the EU if the company is exporting to the EU
Access to EU workers and expertise has more restrictions
What legal change is expected for single use plastics in the UK?
In October 2023, a law is expected to be passed to ban all single use plastics in products, except ready made food. This will impact Product as businesses will have to redesign how they present the product to consumers.
Name 5 ways ethics and marketing come together.
Ethical decisions often, but not always, cost more.
1.Honesty with product claims, not exaggerating.
2.Deal with customer complaints fairly even if it costs more.
3.Don’t outsource delivery drivers.
4.Organic packaging and materials.
5.Avoid dodgy Social influencers.
How important is ethics to marketing?
It depends on the market segment. Decide if the target segment want ethics. Remember Demographics > age > gen Z love ethics.
Name 3 purposes of market research
- To identify the market segments
- To identify the competition
- To identify trends and size of the overall market
Name 5 primary research methods
Interviews
Survey
Focus Groups
Trials
Observations
What are the disadvantages of primary research?
To get a large, reliable set of results takes a large investment in time and money.
What are the characteristics of a good survey?
clear objectives, targeted at the right people and few questions
How does a focus group work?
Small group of people, moderator, semi-structured focused questions
Give 2 examples of internal, secondary research
- Customer sales data from loyalty cards and sales records
- The business database records on customer profiles
Give 4 examples of external secondary research
1.commercially published reports 2.government statistics
3.trade journals
4.media sources.
What is validity of market research?
Responses are gathered and recorded accurately
What is reliability of market research?
The data gathered is free from bias so results would be repeated if the research was repeated elsewhere
Name 5 factors to consider with market research
Cost, Reliability, Appropriate, Validity, Up-to-date CRAVU
What is quantitative data?
Quantitative market research is the process of collecting large amounts of statistical data through surveys, questionnaires, and polling methods.
What is qualitative data?
Qualitative market research involves determining customer motivation through close observation –– typically in a small group or face-to-face encounter
Name the 4Ps and the Extended Marketing Mix
Product, price, place, promotion.
People, Physical Environment, Process
What product features can be developed?
form and function, packaging, branding
What 9 features can be included in packaging?
1.Product descriptions, images
2. Contents e.g. ingredients
3. Presentation e.g. luxury
4. Health warnings and safety information e.g. may include nuts
5. Safety e.g. child proof caps
6. Hygiene and protection
7. Promotional offers
8. Unique selling points
9. Environmental concerns e.g. steps to reduce excess packaging or to recycle
Name 4 features that can be included in a brand.
Colour, Logo, Shape, Strap line eg Apple
Name 4 benefits of a strong brand
Adds value, charge premium price, easily recognisable on shelf, reduces marketing costs
Name 4 pricing strategies
cost plus pricing, price penetration, competitor pricing, price skimming
Describe cost plus pricing
The price is determined by the variable cost of each product + a percentage of the fixed costs PLUS a percentage for profit (depends on competition and shareholder expectations)
Describe penetration pricing
Start with a low initial price to gain market share, then raise the price
Describe price skimming
Start with a high price aimed at early adopters to recoup costs and then reduce the price.
Describe competitor pricing
Follow the pricing of the competition, maybe slightly lower, and aim to differentiate on other aspects of the 7Ps. This avoids a price war.
Give examples of promotional strategies
advertising, public relations (PR). Sponsorship, use of social and other media, guerrilla marketing, personal selling, product placement, digital marketing, corporate image.
Give 3 examples of using direct distribution
mail, online, auction
What are the advantages of guerrilla marketing?
Memorable, attention grabbing, not too expensive
What are the disadvantages of guerrilla advertising?
Short term, impact fades, limited use to grab attention
What are the advantages of Public Relations?
Cost effective way of reaching a larger audience and has credibility because it is not paid for promotion
What are the disadvantages of Public Relations?
Lack of control over when and how the message goes out. Not guaranteed to go out.
Give 3 examples of Public Relations
Press releases, consumer education, CSR activities
What is the advantages of social media advertising?
Cost effective as you pay per click and it is highly targeted to age, gender etc
