Unit 2: Marketing a Business Flashcards
Definition: Market Research
Research that allows a business to find out about its market, its customers and its potential customers.
Why entrepreneurs carry out market research?
- To find out demand for product.
- To find out gap in the market.
Definition: Primary Market Research
Collecting new information about the market you’re in.
Definition: Secondary Market Research
Examining existing information about the market you’re in.
Why might primary research be inaccurate?
- Biased people.
- People could lie.
- Sample size.
Why might secondary research be inaccurate?
- Outdated.
- Biased.
- Data might not be applicable.
Why entrepreneurs use both primary and secondary research?
- Counteract biased.
- Adapt.
- See new and old trends.
- Ensure information is up-to-date.
How does market research improve a small business?
- Find a gap in the market.
- Spot new trends.
- Areas to expand.
- Consumer’s desires/what they want.
- Find out what customers will pay.
- Demand for product.
- Improve existing product/service.
Research, benefits of internet?
- Cheap.
- Quick.
Research, benefits of promotions produced by competitors?
- Large section of population.
- Spot trends.
Research, benefits of questionnaire?
- Can be posted.
- Can get easy to analyse data (closed questions).
Research, benefits of supplier feedback?
- Give feedback on various aspects.
- Can build relationships.
- Can contact directly.
Research, benefits of customer feedback?
- Give feedback on various aspects.
- Contact directly.
Research, benefits of focus group?
- Can get in-depth responses.
- Can find out reasons why people do things.
Definition: Marketing Mix
The combination of factors which help the business sell a product, ususally summarised as the 4 P’s. Price, prodcut, promotion, place.
Marketing mix, prodcut?
Developing and designing a product that satifies customer’s needs and wants. Produce the correct amount to the correct quality and specification.
Marketing mix, price?
Getting the price right so that the product is affordable to customers but also allows the business to make a profit.
Marketing mix, promotion?
Making sure that the customer knows about the product through promotion.
Marketing mix, place?
Ensuring that the product is on sale in places convinient for the customer to buy it.
Why change the marketing mix/marketing strategy?
- Economic conditions, business’s target market expiriencing different circumstances (e.g. recesion).
- Demands of customers change, business needs to alter its marketing to continue appealing to customers (e.g. trends, seasonal).
- Actions of competitiors, business needs to do new things in order to remain competitive.
Why might it be difficult to change the marketing mix/marketing strategy?
- The cost might be too high (to change location, change marketing, or conduct research).
- Skills of employees may be very specific and harder to implement into different departments.
Definition: Product Range
The collective term given to all the products made and sold by a business.
Definition: Product Differentiation
Attempting to make your products stand out from those of rivals.
What entrepreneurs look for in a product?
- Something they’re interested in.
- Something that doesn’t require expensive premier or equiptment.
Why businesses sell a range of products?
- Make the business appeal to a wider range of customers.
- Increase the loyalty of customers.
Difficulties of selling a range of different products?
- One poor product could ruin reputation.
- Cost of research and development of all products.
- Difficulties choosing where to spend money.
- Time.
- People with correct skills.
Ways of adapting a product?
- Packaging.
- New features.
- Different varieties
- Colours.
- Sizes.
- Price
- Shape.
- Market pull.
- Demands of consumers.
- Market research.
Definition: Demand
The quantity of your products that consumers are willing to buy at a certain price.
Relationship between price and demand?
Price goes up = demand goes down.
Products that don’t follow the ‘price increase = demand decrease’ rule?
- Collectables.
- Essentials (e.g. medicine, fuel).
Factors that influence the price of a product?
- Manufacture cost/service cost.
- Competitors.
- Results of market research.
- Target market.
- Trends.
- Money.
What happens to demand and profits if an entrepreneur increases the price of their products?
Demand decreases and profits tend to decrease but this depends on:
- Product.
- Consumer habbits.
What happens to demand and profits if an entrepreneur decreases the price of their products?
Demand increases and profits tend to increase but this depends on:
- Product.
- Consumer habbits.
Definition: Promotion
The methods used by an entrepreneur to communicate with customers and raise awareness of the business.
What are the aims of promotions?
- Give customers information about changes to the business.
- Develop brand image and reputation of the business.
- Encourage new people to use the business for the first time.
Promotion methods suitable for small businesses?
- Local media.
- Public relations.
- Direct mail.
- Sales promotions.
Why some methods of promotion are unsuitable for small businesses?
- Cost too much.
- Skills of entrepreneur (e.g. can’t create TV advert).
- Time.
- Reach customers that won’t visit.
Promotion, advantages of advertising on local media?
- Wide variety.
- Wide geographical area.
- Alter advert to suit budget.
Promotion, disadvantages of advertising on local media?
- Cost.
- Time.
Promotion, advantages of sales promotion?
- Attract new customers.
- Keep customers loyal.
Promotion, disadvantages of sales promotion?
- Loss of profits.
Promotion, advantages of direct mail?
- Know it’s reaching target market.
- Can be free/cheap.
Promotion, disadvantages of direct mail?
- Postal time.
- Sometimes ignored.
Promotion, advantages of personal selling?
- Build good customer relations.
- Tailor selling.
Promotion, disadvantages of personal selling?
- Bad reputation (hastling).
- Waste of skilled workers.
Promotion, advantages of public relations?
- Easy way to advertise.
- Build good reputation.
- Ethical.
Promotion, disadvantages of public relations?
- Losing money.
- Pick right charity or team etc to sponsor.
Promotion, advantages of merchandising?
- Make more money.
Promotion, disadvantages of merchandising?
- Expensive.
- Losing money.
- Risky.
Why businesses use a range of promotions?
- Outweigh disadvantages of certain methods.
- Reach more potential customers.
- Assess for future promotions.
Definition: Channel of Distribution
The method used to transfer goods and services from the producer to the final consumer.
Where can you buy products from?
- Catologue.
- Phone.
- Shop.
- Internet.
- Door to door.
- Intermediary (e.g. wholesale).
- Directly from producer.
Definition: Intermediary
A business that buys products from manufacturers and sells them on to the end consumer.
Channel of distribution, zero level?
- A business produces a product (e.g. Lego, Superdry, Apple).
- Consumers buy it directly from them.
Channel of distribution, one level?
- A business produces a product (e.g. Nike, Heinz)
- Retailers buy the products from the producers (e.g. Sports Direct, Tesco).
- The end consumer buys the product from the retailer.
Channel of distribution, two level?
- A business produces a product (e.g. Heinz).
- Wholesalers buy the product (e.g. Costco).
- Small local retailers buy the product from the wholesaler (e.g. corner shop).
- The end consumer buys the product from the local retailer.
Definition: Wholesale
A business that buys products in bulk from large manufacturers and sells them on in smaller quantities to small, indipendant retailers.
Why sell through intermediaries?
- Low transportation (only to retailers).
- Can gain more money from selling in bulk.
- Guarenteed sales.
- No promotion costs.
- Wide geographical area.
Formula for percentage change?
Percentage change = (Difference ÷ Original) x 100
