Unit 2 Marketing

Question 1

What are the objectives of the marketing department?

Answer 1

-Carrying out market research to identify customer needs
-Making decisions on the marketing mix (4p’s)
-Informing customers about their product and persuading them to buy it

Question 2

Qualitative and Quantitative Data

Answer 2

Qualitative data- Related to attitudes opinions and feelings. Can be difficult to statistically analyse.
Quantitative data- Data related to numbers. This data can be added up and satistically analysed.

Question 3

Advantages of primary research

Answer 3

-It is up to date
-It is collected for your specific purpose
-It can be trusted because you gathered it.

Question 4

Disadvantages of primary research

Answer 4

-It can be very expensive to collect
-It can be time consuming to collect

Question 5

Advantages of secondary research

Answer 5

-It is quick to collect
-It can be cheaper than primary research
-There is a wide range of research on the internet

Question 6

Disadvantages of secondary research

Answer 6

-It could be out of date
-The source might be biased/untrustworthy
-The data might not be wholly relevant

Question 7

Methods of market research

Answer 7

Questionnaire
Focus groups
Interview
Surveys
Trials
Websites
Magazine/newspaper article
Census data

Question 8

What is market research and why is it important?

Answer 8

-Market research is how businesses collect information on whether or not their products or services will be bought
It is important as it will:
- help a business be clear on whether there is demand for their product/service
-avoids unnecessary investment

Question 9

Different ways the market is segmented

Answer 9

Age
Gender
Income
Location
Lifestyle

Question 10

Pricing Methods: Price Penetration

Answer 10

-When a business tries to enter a competitive market by starting off at a low price to make a customer base then returning to a normal price

Question 11

Price penetration Adv + Disadv

Answer 11

Adv:
-New customers might be attracted to try the new product, and then continue to buy if they like it.
Disadv:
-However, the business might not make enough revenue to cover costs during this period
-A low price might present an image of low quality
-If brand loyalty is high, business might not attract customers.

Question 12

Pricing methods: Cost-plus pricing

Answer 12

When a business see how much it costs to make/buy the product as well as any other costs, and then adds a percentage in order to ensure profit on a product.

Question 13

Cost-plus pricing Adv + Disadv

Answer 13

Adv:
A good way to ensure survival and that products sold actually make a profit.
Disadv:
- Price may be too high compared to competition
-As costs change, time and money need to be spent changing prices
- Can be difficult to charge to cover all running cost of a business

Question 14

Pricing Methods: Price skimming

Answer 14

Where the price of the product starts off high because the product is new/unique and gradually comes down to a normal price as demand falls.

Question 15

Price skimming Adv + Disadv

Answer 15

Adv:
-Allows business to maximise sales whilst the product is in high demand
-Allows businesses to target lower income groups as demand falls, so that all target groups pay the most possible
Disadv:
-It might put consumers off if price is too high
-There will only be a very short period of very high demand
-Customers may simply wait until the price falls

Question 16

Pricing methods: Competitor pricing

Answer 16

Where a business tries to match or beat their competitors’ prices

Question 17

Competitor pricing Adv + Disadv

Answer 17

Adv:
Customers like to shop around for the best price so it can help attract customers away from competitors
Disadv:
-Lowering prices to match/beat competitors can slash profit margins
-Small businesses will find it hard to match/beat the prices of big competitors as they don’t have the benefit of economy of scales

Question 18

Pricing methods: Promotional pricing

Answer 18

The short term use of price reductions and special offers to increase sales

Question 19

Promotional pricing Adv + Disadv

Answer 19

Adv:
-A good way to increase sales in the short term
-Whilst buying products on promotions, customers might buy more profitable items in the shop
-Can create improved cash flow
Disadv:
-Some customers may only come to the store for the sales
-Each item is sold for less revenue than the initial price
-It costs money to advertise promotional offers

Question 20

Four good features of a product

Answer 20

• It is innovative
  -It is functional
  -It is made to a good standard
  -It meets the needs of the customer

Question 21

Disribution Channels: Producer –> Customer

Answer 21

When the producer of a product sells directly to the customer (e.g Dell computers sell directly to customers)

Question 22

Distribution Channels: Producer –> Customer Adv + Disadv

Answer 22

Adv:
-The business has complete control over brand image
-The business has direct contact with customer (useful for market research)
-The business can make a higher profit off each product
Disadv:
-The business will only sell one unit at a time, therefore admin costs will be high
-Customers may prefer the convenience of a local high street retailer
-As a business grows in size, it can be difficult to manage so many individual customers/sales.

Question 23

Producer –> Retailer –> Customer

Answer 23

Where the producer sells their product in big batches to a retailer, which in turn sells to the customer

Question 24

Producer –> Retailer –> Customer Adv + Disadv

Answer 24

Adv:
-The producer is able to send one large delivery to the retailer, rather than multiple smaller deliveries
-Many products sell better if placed in a convenient location for customers
-Customers might prefer to buy from “trusted brands”
Disadv:
-The producer will have to sell to the retailer at a lower price so they can get their ‘mark-up’
-Some larger retailers can bully smaller businesses into getting lower prices or longer credit terms.

Question 25

Producer –> Wholesaler –> Retailer –> Customer

Answer 25

Where the producer sells one very large batch to a wholesaler, who then breaks down the batch into smaller units and sells onto smaller retailers. (breaking the bulk)

Question 26

Producer –> Wholesaler –> Retailer –> Customer Adv + Disadv

Answer 26

Adv:
-one very large delivery reduces admin + delivery costs
-helps with convenience with customers (e.g corner shops)
Disadv:
-producer will have to sell their stock at a much lower price to allow wholesalers to add on their ‘mark-up’
-by the time the product reaches their customer, it may not be in perfect condition

Question 27

What are digital distribution channels?

Answer 27

-Used to deliver goods via the internet, where no physical products exist (e.g e-books, digital music, films and TV programmes)
-Can be good as customers can receive their product immediately 24/7
-However, not all consumers have the internet and there may be technical issues.

Question 28

The parts of the product life cycle

Answer 28

Introduction
Growth
Maturity
Decline

Question 29

Introduction meaning

Answer 29

The stage where the product is launched. Sales will be low but will begin to rise steadily as a business will likely advertise it in a number of different ways to get off the mark.

Question 30

Growth meaning

Answer 30

Sales show their most rapid growth. Advertising and other promotion support change slightly as product will be generally known. There is no need for special offers as it is in high demand.

Question 31

Maturity meaning

Answer 31

Sales are towards their highest. Growth is slowing down. Extension strategy needed.

Question 32

Decline meaning

Answer 32

Sales are falling. Customers see the product as old and switch to a newer replacement

Question 33

Extension strategies for a product

Answer 33

-A business could lower its prices
-A business could redesign the packaging to make it more appealing
-Advertising the product to a wider audience
-Other markets may be developed (e.g sell in other countries or sell to a new target market)