Unit 2 - The Management Of Marketing Flashcards
What is market led marketing?
Products are produced based on what the customer wants
Customers needs and wants are identified by doing market research
What is a downside to market led marketing?
There may be significant competition
What is product led marketing?
Product is produced as the organisation thinks they are good at providing it
What is a downside to product led marketing?
The market doesn’t necessarily have w need for it
Little or no market research as the needs and wants of the customer are not important
What does consumer behaviour aim to do?
Answer why what who and where,
Decide on how the product is marketed and future trends
Why do consumers buy? - consumer behaviour
Status, need, want, trend
What motivates people to buy? - consumer behaviour
POS, layout, promotions
Where do people choose to buy from? - consumer behaviour
Online, store, or for convenience
Who buys the product? - consumer behaviour
What target does it appeal to?
What are the three types of consumer behaviour?
Impulse
Routine/habit
Informed
Define impulse - consumer behaviour
Buying something without thinking, usually small value items.
Definite routine/habit - consumer behaviour
Buying something out of habit and without much thought
Define informed - consumer behaviour
Buying something after careful consideration of options, brands, prices etc
May be due to past experiences/reviews
Usually more high value items
What are benefits of market research?
Helps businesses to make informed decisions
Reduces the risk of an unsuccessful product launch
Customers feel valued as their opinions are used
Enhances the companies reputation
What is desk research?
Information that already exists and can be researched at a ‘desk’
What are the five types of desk research?
Written Oral Pictorial Graphical Numerical
What is an advantage of desk research?
It is cost effective as can be researched at a desk.
What is a disadvantage of desk research?
The information is secondary so can be old or out of date
May not be specific
Can be biased
What is the difference between quantitative and qualitative?
Quantitative is factual and can be measured or counted
Qualitative is based on someone’s opinion
What is field research?
Where someone physically goes out and collects information
What are advantages of field research?
The information is new and up to date
Gives businesses a competitive advantage as competitors don’t have access to this information
Information is specific and reliable
What is a disadvantage of field research?
Can be expensive and time consuming
What are the four methods of field research?
Questionnaire/survey
Personal interview
Hall tests
Focus groups
Describe questionnaire/survey as a method of field research - advantages and disadvantages etc
Involves asking people for their opinion through a series of questions
Usually done online but can be done by post, telephone or in person
Advantages-
Inexpensive
People in large geographical areas can be targeted
Disadvantages-
Not always a high response level
Clarification can’t always be gained so questions may be skipped
Describe personal interview as a method of field research - advantages and disadvantages etc
When people meet and a number of questions are asked - usually used for a job
Advantages-
Clarification can happen if questions are not understood
Information is obtained instantly
Disadvantages-
Time consuming method
Expensive as interviewers need to be paid
Analysis can take a long time
Describe hall tests as a method of field research - advantages and disadvantages etc
Involves a product being given to customer to test out
Advantages-
Diverse group can be asked
First hand information
Disadvantages-
People may feel they need to give positive feedback
Can be expensive to make changes to the product
Describe focus groups as a method of field research - advantages and disadvantages etc
When a group of people are asked for their views on a product
Advantages-
First hand information is gathered
Lots of opinions will be gathered
Disadvantages-
People may feel they can’t disagree so false information can be gathered
What is random sampling?
Involves randomly selecting people from a list (telephone directory etc)
These people are then asked to take part in a method of field research
What are advantages of random sampling?
No chance of bias as it’s a random group
Many opinions and views can be gathered
What are disadvantages of random sampling?
Group is made up of all different target markets - unfocused.
Doesn’t take into consideration the personal differences, age etc.
What is quota sampling?
People are selected based on certain characteristics - age gender occupation etc.
What are advantages of quota sampling?
Less expensive to carry out than random sampling
Results will be focused as the group is specific to the need
What are disadvantages of quota sampling?
May have bias results as group have been selected
As all members of group have the same characteristics, they may all have the same views
What does an extension strategy do?
Adapts a product to prolong its lifespan
What are examples of extension strategies?
Change in price Add new features New advertisements and marketing campaigns Change the packaging Improve the product Target new markets
What is a product portfolio?
Refers to the different products an organisation may choose to sell
What are the two types of product portfolios?
Product line and diversified product portfolio
What is a product line portfolio?
A group of products that are closely related
What is a diversified product portfolio?
Where a business sells a mix of unrelated products
What are the benefits of having a product portfolio?
Spreads the risk of failure - if one product fails they have others to fall back on
The chances of success of a new product are high as loyal customers will be happy to try it
Appealing to more than one customer segment will increase sales
Can cope with products which have seasonal demands
What are the disadvantages of having a product portfolio?
Cost of promotions and advertising lots of different products can be expensive
If one product receives a bad reputation this can impact the rest
Research and development costs can be high
Staff may require training on the different products which is time consuming and expensive
What are the five stages of the product life cycle?
Development Introduction Growth Maturity Decline
What happens in the development stage of the product life cycle?
A number of market research activities are carried out to check if the product has demand
What happens in the introduction stage of the product life cycle?
The product is launched into the market but normally sales are low due to competition and lack of awareness from the public
What happens in the growth stage of the product life cycle?
Sales rise sharply as awareness increases
This is the first stage where the company starts making a profit
What happens in the maturity stage of the product life cycle?
Sales reach their peak then begin to slow
Competition increases so prices drop
Product is at its most profitable
How do you keep a product in the maturity stage of the product life cycle?
Use extension strategies
What happens in the saturation stage of the product life cycle?
The end of the maturity stage
Too many competitors
People are no longer demanding the product
High profits but sales are decreasing
What happens in the decline stage of the product life cycle?
Sales begin to fall
Profit begins to fall
Eventually the product is withdrawn from the market
What is a Boston matrix?
It is used to plot the range of products a business has, and identifies what products need changed or introduced
What does the Boston matrix categorise products into areas based on?
Market share and market growth
What is the Boston matrix used to analyse?
A company’s product portfolio
What are the four sections of a Boston matrix?
Stars
Cash cows
Question marks
Dogs
What are the advantages of the Boston matrix?
It is simple and easy to understand
It helps to identify which products should be retained and withdrawn
What are the disadvantages of the Boston matrix?
It only provides a snapshot of the current position
It does not take into account external factors
High market share does not always mean high profits are being made
What is the pricing strategy of cost plus?
A percentage of the cost is added to give a profit
What is the pricing strategy of competitive?
Price of product set similar to competitors
Long-term strategy
What is the pricing strategy of skimming?
The price is set high to begin with and lowers over time (phones, iPads etc)
Short-term strategy
What is the pricing strategy of penetration?
Price set low to begin with and increases over time
Short-term strategy
What is the pricing strategy of price discrimination?
Some businesses will charge different prices for a product at different times of the day or year, depending on the level of demand
Short-term strategy
What is the pricing strategy of destroyer?
The price is deli are you set extremely low for a period of time to force competition out
This is illegal
Short-term strategy
What is the pricing strategy of promotional pricing?
Used when organisations are trying to boost sales, prices are lowered for a short space of time
Short-term strategy
What is the pricing strategy of premium pricing?
The price is set permanently higher than that of its competition due to its premium imagine
Long-term strategy
What is the pricing strategy of loss leaders?
When a business puts the price so low it makes a loss, this is to entice customers into the store
Short-term strategy
What is the pricing strategy of low price?
The price is set permanently lower than that of competitors (aldi, lidl etc)
Long-term strategy
What is the pricing strategy of psychological pricing?
Organisations set the price at 99p or £99.99 to psychologically influence customers looking for value of money
Also fits in when filtering searches based on price
Short-term strategy
What are the four channels of distribution?
DIRECT SELLING - Manufacturer -> customer
RETAILERS - Manufacturer -> retailer -> customer
WHOLESALERS -
Manufacturer -> wholesaler -> retailer -> customer
Manufacturer -> wholesaler -> customer
What factors are considered when choosing a channel of distribution?
The product being sold - whether it is perishable (frozen, flowers etc) must be stored correctly during transportation
Reliability of companies (wholesalers/retailers)
Legal requirements/licensing restrictions (alcohol must be sold in a licensed outlet)
The imagine of the product - where it is sold
What are methods of direct selling?
E-commerce
Mail order
Personal selling (door to door)
Online shopping channels
What are the advantages of direct selling?
Exclusive products Prices can be cheaper Available 24/7 to customers Wider area can be targeted Money saved on staffing costs
What are the disadvantages of direct selling?
Lack of personal service High advertising/website costs Delay between purchasing and receiving Unable to ‘try on’ Delivery costs may put customers off
What are the advantages of retailers?
Retailers are usually located closer to customers than the manufacturer
Retailers take care of promoting the product
Large retailers buy in bulk from the manufacturer
What are the disadvantages of retailersV
Retailers take a cut of the profit
Retailers may alter the products price
Product will face competition from similar products in the store
What are the advantages of wholesalers to manufacturers?
Packaging and displaying of goods is taken care of by the wholesaler
Wholesalers buy in bulk
Wholesalers take care of promoting to retailers
What are the disadvantages of wholesalers to manufacturers?
Manufacturers make less profit as wholesalers take a cut
Manufacturer can’t control how product is marketed
Manufacturer can’t control how retailers sells the product
Advantages of wholesalers to retailers?
Retailers can buy small quantities to save on storage and also if not a lot gets sold
Retailers can benefit from promotions offered by wholesalers that manufacturers may not offer
Disadvantages of wholesalers to retailers?
It is more expensive than going directly to a manufacturer
Competitors also have access to wholesalers
Retailer does not have access to exclusive deals offered by manufacturer
What might a business consider when deciding where to locate their store?
Competition - far away from competitors
Availability of resources - suitable premises car park etc or close to suppliers if products have a short shelf life
Costs - may be cheaper to locate in certain places
Transport links - for staff and customers
What factors affect promotion methods?
The target market - ensure the product is seen by the right people
Finance available
Competitors advertising
The law
What are some promotional strategies?
Coupons
Loyalty cards
Competitions
Special offers
Free samples
Celebrity endorsement
What are some methods of advertising?
Broadcast media - TV, radio
Print media - billboards, posters, newspapers
Apps - advertising within apps (banners, pop ups etc)
SMS - sending texts to customers to promote a product
What is public relations?
The activities of a business that help to control the image of the business
What are some public relations activities?
Press conferences Press releases Donations to charities Sponsorships Promotional merchandise Social media
What are examples of above the pipeline promotion?
Television Radio Cinema Billboards Internet
Describe above the pipeline promotion
High quality adverts
Can reach wide audiences
The business doesn’t have direct control over which consumer their products are advertised to
Expensive due to advert production
What are examples of below the line promotions?
Social media
Apps
Product endorsement
Product placement
Describe below the line promotion
Business has control over the customers the advert is aimed at
BTL is more affordable than ATL
Impact can only last for a limited period of time e.g. social media posts
Some customers do not like BTL as they feel it is intrusive
What is into the pipeline and out of the pipeline promotions?
Into the pipeline - manufacturers use this to encourage distributors to purchase more stock (wholesaler and retailer)
Out of the pipeline - used to encourage the customer to purchase the product
Examples of into the pipeline promotion?
Trade credit - buy now, pay later
Bulk-buying discounts
Examples of out of the pipeline promotion?
Special offers - BOGOF
Free gifts
Vouchers/coupons
Loyalty schemes
What is unethical advertising?
Using fear tactics - buy now before it’s too late
Distortion of facts - ingredients
Obtaining research information illegally or without consent
Marketing a product falsely
Using women and men as sex symbols for advertising
Concealing dark sides or side effects of products or services
What are the two agencies that enforce ethics?
ASA (Advertising Standards Authority)
-monitors all the advertising in the UK and can request adverts to be removed
OFCOM (Office of Communications)
-government agency which ensures all programs follow the rules of the broadcasting code
What is the people factor?
Business must update staff, ensure they are trained, monitor them and ensure selection methods are rigorous
They should also always provide effective after sales service
What is the process factor?
Involves the processes and systems used to deliver the service - websites, stores, call centres etc
- well staffed
- user friendly
- latest technology (tracking, Apple Pay etc)
What is the physical evidence factor?
The image of the business
- bright and modern premises
- easy to navigate stores
- attractive layout of stores and websites
- available parking
- clean
- good reviews
