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Business > Unit 3 > Flashcards

Unit 3 Flashcards

1
Q

What is the main role of marketing?

A

To convert the wants of an individual into a need.

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2
Q

Why must businesses build customer relationships?

A

To maintain the loyalty of its customers to the business and its products.

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3
Q

What is the customer base?

A

The group of customers a business sells its products to.

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4
Q

What is customer loyalty?

A

Once a customer base has been established, the marketing function must then aim to keep these customers.

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5
Q

What is a market?

A

All customers and consumers who are interested in buying a product and have the financial resources to do so.

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6
Q

What is a target market?

A

Individuals or organisations identified by a business as the customers or consumers of its products.

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7
Q

What is a customer?

A

An individual or business that buys goods and services from a business.

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8
Q

What is a consumer?

A

The final user of a product.

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9
Q

What are the two types of markets?

A
  • Consumer markets.
  • Industrial markets.
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10
Q

What are consumer markets?

A

Markets for goods and services bought by the final consumer.

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11
Q

What are industrial markets?

A

Markets for goods and services bought by the final consumer.

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12
Q

What is a business environment?

A

The combination of internal and external factors that influence the operations of a business.

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13
Q

Why do consumer spending patterns change?

A
  • The price of the product.
  • The price of competitors’ products.
  • Changes in consumer income.
  • Changes in population size and structure.
  • Changes in tastes and fashion.
  • Spending on advertising and other promotional activities.
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14
Q

What kind of response to changes in customer needs do businesses need to do survive in the long run?

A

It has to respond to any change in costumer needs.

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15
Q

Why do some markets become more competitive?

A
  • Government intervention in markets.
  • Growth of free trade between countries.
  • Development of e-commerce and social media networks.
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16
Q

How can the government affect competition in markets?

A
  • Legal controls that prohibit market domination.
  • Selling off public sector organisations to the private sector.
  • Deregulation.
  • Providing financial and other assistance to new and small to medium- sized businesses.
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17
Q

What is deregulation?

A

The removal of government controls from an industry.

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18
Q

What is free-trade?

A

No barriers exist that might prevent trade between different countries.

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19
Q

How do businesses respond to changing spending patters and increased competition?

A
  • Product development.
  • Improve efficiency.
  • Increased promotion.
  • Look for new markets.
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20
Q

How does product development help?

A

It helps a business remain competitive and market research will help to identify how exactly the needs and wants of consumers are changing.

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21
Q

How does improving efficiency help?

A

The efficient use of resources will help a business to reduce average costs.

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22
Q

How does increased promotion help?

A

Increasing advertising to persuade consumers to buy your product and not that of competitors,

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23
Q

How does looking for new markets help?

A

Sometimes consumer spending patterns change so much, or the level of competition in a market becomes so great, that the better option is for a business to look for new markets for its products.

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24
Q

What is a niche market?

A

It is a very small part of the whole market.

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25
Q

What is niche marketing?

A

Developing products for a small segment of the market.

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26
Q

What are some benefits of niche marketing?

A
  • Small firms are able to survive and earn profit even in markets that are dominated by larger firms.
  • There is less competition in these markets. Firms do not waste scarce resources responding to competitor actions.
  • Consumers will usually pay more for a high-status, exclusive product. This offers firms the opportunity to charge high prices and earn high profit margins.
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27
Q

What are some limitations of niche marketing?

A
  • The opportunity to earn high profits might attract competitors and this will reduce prices and future profits.
  • The small size of the market means that economies of scale are unlikely to be achieved. This means that unit costs are higher than they would be if the product was sold to a mass market.
  • Small changes in consumer spending patterns could have a very significant impact on firms operating in niche markets.
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28
Q

What is a mass market?

A

A market for goods produced on a large scale for a significant number of end consumers.

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29
Q

What is mass marketing?

A

Selling the whole product to the same market.

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30
Q

What are some benefits of mass marketing?

A
  • Mass marketing requires large-scale production. Larger firms often benefit from economies of scale which reduces unit costs.
  • A much larger market has the potential for high sales and profits.
  • Changes in consumer spending patterns might have less effect on firms selling to a mass market. This reduces the risk to firms who operate in mass markets.
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31
Q

What are some limitations of mass marketing?

A
  • There is much more competition in the market, which lowers prices and profit margins.
  • Not all markets are large enough to support a mass marketing approach.
  • Consumers today are often looking for something slightly different from that offered by same product mass marketing. This has led to greater division of the whole market and reduced the scope for mass marketing.
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32
Q

What is market segmentation?

A

Dividing the whole market into segments by consumer characteristics and then targeting different products to each segment.

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33
Q

What is a market segment?

A

A part of the whole market in which consumers have specific characteristics.

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34
Q

What are some methods for how markets can be segmented?

A
  • Geographic segmentation.
  • Demographic segmentation.
  • Psychographic segmentation.
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35
Q

What is geographic segmentation?

A

Dividing consumers in the market by geographic area.

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36
Q

What is demographic segmentation?

A

Dividing consumers in the market by factors such as age, gender, income, ethnic background and social class.

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37
Q

What is psychographic segmentation?

A

Dividing consumers in the market by lifestyles, personalities and attitudes.

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38
Q

What are some benefits of segmentation?

A
  • Goods and services can be designed to meet the specific needs of consumers in each segment.
  • Small firms which may not be able to compete in the whole market are able to operate in one or two segments.
  • Segmentation of the whole market sometimes identifies a segment of consumers who have very specialised needs that are not being satisfied (opportunity for niche marketing).
  • Marketing strategies can be better targeted at each segment. This reduces the waste of scarce resources.
  • Price discrimination.
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39
Q

What is price discrimination?

A

Charging higher prices for very similar products in one segment than in another.

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40
Q

What affects how businesses choose a method of segmentation?

A

It depends on the product or service.

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41
Q

What is market research?

A

The process of collecting, recording and analysing data about the customers, competitors and market for a product.

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42
Q

What does market research give a business information about?

A
  • Its customers.
  • Its competitors.
  • Its market.
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43
Q

What does the information obtained from market research help a business to do?

A
  • Find out what consumers like and dislike about its products.
  • Identify consumer tastes and preferences.
  • Decide on the best promotion, packaging and distribution methods for its products.
  • Unique selling point.
  • Know the size of the market.
  • Explain the research for the sales of its current products.
  • Predict how the demand for its products may change in the future.
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44
Q

What is a businesses unique selling point?

A

The special feature pf a product that sets it apart from competitors’ products.

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45
Q

What is market orientated?

A

Products are developed based on consumer demands as identified by market research.

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46
Q

What are the two main benefits of a market-orientated approach?

A
  • The risk of new products failing is reduced because they have been produced following market research which identifies the needs of consumers.
  • Products that meet the needs of consumers are likely to last longer in the market than goods which have been produced using a product-orientated approach. This leads to higher sales and profits.
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47
Q

What is product orientated?

A

The firm decides what to produce and then tries to find buyers for the product.

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48
Q

What are the two categories that market data can be divided into?

A
  • Primary research.
  • Secondary research.
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49
Q

What is primary research?

A

The collection of first-hand data for the specific needs of the firm.

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50
Q

What is another way of saying primary research?

A

Field research.

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51
Q

What are the benefits of primary research?

A
  • Data is up-to-date.
  • Data is collected for a specific purpose which is directly relevant to the business.
  • It is not available to other businesses, this may provide a competitive advantage.
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52
Q

What are the limitations of primary research?

A
  • It is costly to collect.
  • It is time-consuming.
  • There is a risk of the data being inaccurate or containing bias.
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53
Q

What is secondary research?

A

The collection of data from second-hand sources.

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54
Q

What is another way of saying secondary research?

A

Desk research.

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55
Q

What are the main uses of secondary research?

A
  • Internet.
  • Government publications.
  • Newspapers and magazines.
  • Libraries.
  • Market research agencies.
  • Business records.
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56
Q

What are the benefits of secondary research?

A
  • It is fairly cheap to obtain.
  • It is easier and quicker to obtain than primary research data.
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57
Q

What are the limitations of secondary research?

A
  • It may have been collected some time ago, so it is not up-to-date.
  • It has not been collected for the specific purpose required by the business so it may not be as reliable or as useful as primary data.
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58
Q

What are the two types of primary research?

A
  • Quantitative research.
  • Qualitative research.
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59
Q

What is quantitative research?

A

The collection of numerical data that can be analysed using statistical techniques.

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60
Q

What is qualitative research?

A

The collection of information about consumers’ buying behaviour and their opinions about products.

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61
Q

What are some methods of primary research?

A
  • Focus groups.
  • Observation.
  • Test market.
  • Consumer surveys.
62
Q

What are focus groups?

A

A group of consumers are invited to discuss topics such as new products, packaging, brand names and advertisements. The discussions are often recorded or filmed.

63
Q

What are the advantages of focus groups?

A

It is a good way for the business to find out from typical consumers what they think about a product and its marketing.

64
Q

What are the disadvantages of focus groups?

A
  • It can be time-consuming to arrange.
  • No numerical data is collected, which makes statistical analysis very difficult.
65
Q

What is an observation?

A

The behaviour of consumers is secretly observed and recorded by market researchers.

66
Q

What are some advantages of observations?

A
  • What consumers do is often more accurate than what they say they do in interviews or questionnaires.
  • You could check quality of the services that they are providing to the consumers.
67
Q

What are some disadvantages of observations?

A
  • It is more expensive as you need trained observers to analyse customer behaviour and there is no opportunity to ask consumers why they behaved as they did.
68
Q

What is a test market?

A

The test market is chosen to represent the total market. A limited quantity of the product is produced and sole in a carefully selected are of the market.

69
Q

What are some advantages of test marketing?

A
  • The cost of any problems is limited to a smaller output.
  • Identifying and solving problems in the test market increase the chance of a more successful introduction of the product into the main market.
70
Q

What are some disadvantages of test marketing?

A

It takes longer to get the product to its main market and the cost of producing good for the test markets makes it expensive.

71
Q

What are consumer surveys?

A

Surveys can collect both qualitative and quantitative data, often with the aid of a questionnaire.

72
Q

What are the types of consumer surveys?

A
  • Interviews.
  • Postal surveys.
  • Online surveys.
73
Q

What is an interview?

A

A trained interviewer asks questions to an interviewee and record their answers. This might take place on the street, supermarket or in the interviewees home.

74
Q

What are some advantages of an interview?

A
  • The interviewer can explain any questions that the interviewee does not understand and they can often tell if the interviewee is replying honestly.
  • Relatively accurate data is collected.
75
Q

What are some disadvantages of an interview?

A
  • It is more expensive if trained interviewers are used.
  • If trained interviewers are not used then there is a greater risk of the data collected containing bias - this is because the interviewer could ask questions in a way to influence the response of the interviewee.
76
Q

What are postal surveys?

A

Questionnaires are posted to peoples homes and they are asked to complete and return them.

77
Q

What are some advantages of postal surveys?

A
  • Good way of getting the views of the population spread over a wide geographical area.
  • Cheap.
78
Q

What are some disadvantages of postal surveys?

A
  • Often seen as ‘junk mail’ and are thrown away - producing a very low response rate.
  • Could contain bias because only the people with a real interest in the subject of the survey bother to reply.
79
Q

What are online surveys?

A

Many businesses now use the internet and their own websites to carry out surveys.

80
Q

What are some advantages of online surveys?

A
  • Covers a very wide geographical area - as anyone with internet access can take part.
  • The results are typed into an online questionnaire and can be instantly collected and analysed.
81
Q

What are some disadvantages of online surveys?

A
  • Seen as ‘electronic junk mail’.
  • May not be representative as only those with a real interest in the subject take part and the results can’t be relied upon as representing the views of the whole population.
82
Q

What do you do when its too expensive and time consuming for a business to ask about the opinions of everyone in the target market?

A

This problem can be overcome by selecting a sample from the total market.

83
Q

What is a target market?

A

Individuals or organisations identified by a business as the customers or consumers of its products.

84
Q

What is a sample?

A

A representative sample of the target market selected to take part in market research.

85
Q

Why do you need to sample?

A

Problems can be overcome by selecting a sample from the total market.

86
Q

Why may market research data be innacurate?

A
  • The sample chosen may be too small or not representative of the population.
  • The business may have chosen the wrong type of method to collect the data.
  • People who are interviewed as part of the market research process may not answer questions truthfully.
  • When a survey involves an interview, the interviewer may ask questions in a way that encourages the interviewee to give an answer that does not reflect their true view.
  • The language used by the interviewer or used in a questionnaire, maybe unclear or difficult to understand.
  • The data may be recorded incorrectly, or numerical analysis may be carried out incorrectly.
  • Secondary data may be out of date.
  • Secondary data may have been collected for a different purpose to the one it is being used for.
87
Q

How is qualitative data usually presented?

A

In the form of written reports.

88
Q

How is quantitative date usually presented?

A

Consists of data, usually lots of numbers.

89
Q

What are advantages of representing data in tables?

A
  • A large data can be grouped and presented more clearly.
  • It is easy to extract numerical data.
90
Q

What are disadvantages of representing data in tables?

A
  • They lack visual impact.
  • Too much data in the table can make it difficult for users to understand.
91
Q

What are some advantages of bar charts?

A
  • You can easily see the importance of each piece of data.
  • You can read numerical values from the axis.
92
Q

What are some disadvantages of bar charts?

A
  • When the data values of the parts are very similar, it is difficult to compare the different parts and the chart loses visual impact.
93
Q

What are some advantages of pie charts?

A
  • They show how important each part of the data is compared to the other parts.
  • They are easier to understand for people who dislike numerical values, as there are no numbers.
94
Q

What are some disadvantages of pie charts?

A
  • If there are too many ‘slices’ then it is difficult to see the relative importance of different parts of the data.
95
Q

What are some advantages of pictograms?

A

Data is represented by pictures and not numbers and this helps people who are less numerate.

96
Q

What are some disadvantages of pictograms?

A

It is difficult to show exact quantities using pictures.

97
Q

What are some advantages of line graphs?

A
  • They clearly show trends.
  • Values can be read off from both axes.
  • Data can be added for future time periods.
98
Q

What are some disadvantages of line graphs?

A

They can be difficult to draw and accuracy depends on choosing appropriate scales for both axes.

99
Q

What is a product?

A

The goods and services produced to satisfy a customer need or want.

100
Q

What is a brand?

A

A name, image or symbol that distinguishes a product from a competitor’s products.

101
Q

What are the four P’s?

A
  • Product.
  • Place.
  • Promotion.
  • Price
102
Q

What is the marketing mix?

A

Four marketing decisions needed for the effective marketing of a product.

103
Q

How can customers meet the changing needs and expectations of consumers?

A
  • Develop new products.
  • Change an existing product to meet the changing tastes of customers.
  • Change an existing product to enter a new market.
104
Q

What are some costs of new product development?

A
  • Market research needs to be carried out to identify consumer needs. This can be very expensive.
  • The development of a new product often requires large capital expenditure.
  • There is no guarantee that a new product will be a success. Some products never make it to market.
  • If the investment in a new product is financed by borrowing and the product is not a success, then this could threaten the survival of the business.
105
Q

What are some benefits of new product development?

A
  • In fast-changing markets, such as those involved with hi-tech products, a business will not survive unless it meets the changing needs and expectations of customers.
  • Developing a new product before competitors will bring competitive advantages. The business may be able to charge a high price and achieve high sales producing high profits.
  • New product developed for new markets increased potential sales, revenue and profit.
  • Developing new products to add to those already being produced by the business spreads risk.
  • The development of new products might help to achieve growth and bring benefits from economies of scale.
106
Q

What is brand image?

A

The general impression of a product held by consumers.

107
Q

What are some advantages of creating a brand image:

A
  • Consumers recognise its product more easily when looking at similar products.
  • Its product can be priced higher than less well-known brands.
  • It is easier to launch new products on to the market because consumers already know and trust the brand and so are more likely to try it than if it was from an unknown brand - they have customer loyalty.
108
Q

What are the roles of packaging?

A
  • To protect the product.
  • To provide information about the product.
  • To help consumers recognise the product.
  • The packaging might have a use once the product has been used up (storage).
  • To keep the product fresh once the packaging has been opened.
109
Q

What are some advantages of packaging?

A

If it is well-designed using good quality materials, this sends the message to consumers that this is a good quality product.

110
Q

What are some disadvantages of packaging?

A
  • They might increase the price above what consumers are willing to pay with good quality packaging.
  • If is poorly designed then consumers will have bad impressions of it and think that the product is not very good.
111
Q

What is the product life cycle?

A

The pattern of sales of a product from introduction to its withdrawal from the market.

112
Q

What is the introduction stage?

A

The product is introduced into the market. Sales are low. The product might be making a loss in this stage because of the cost of heavy advertising to gain product recognition.

113
Q

What is the growth stage?

A

The product is becoming better known to consumers. Sales are increasing. The product usually starts to earn profit during this stage.

114
Q

What is the maturity stage?

A

Sales are no longer growing but are not falling. This is the most profitable stage in a product’s life cycle.

115
Q

What is the decline stage?

A

Sales are falling. The product eventually becomes unprofitable and is withdrawn from the market.

116
Q

What are extension strategies?

A

Marketing activities to extend the maturity stage of a product.
(keep the product in its most profitable stage).

117
Q

What are some extension strategies?

A
  • Finding new markets for the product.
  • Finding new uses for the product.
  • Adapting the product or the packaging to improve its appeal to consumers.
  • Increased advertising and other promotional activities.
118
Q

What is the price of a product?

A

The amount paid by the customer to the supplier when buying a good or service.

119
Q

What is the product quality?

A

The product meets the needs and expectations of customers.

120
Q

What could affect the price of a product?

A

The availability of supply, if it is scarce - its price will increase.

121
Q

What are the 5 pricing methods?

A
  • Market skimming.
  • Penetration pricing.
  • Cost-plus pricing.
  • Competitive pricing.
  • Promotional pricing.
122
Q

What is market skimming?

A

Setting a high price for a new product that is unique or very different from any other product on the market.

123
Q

What are some advantages of market skimming?

A

The profit earned when using market skimming is very high.

124
Q

What are some disadvantages of market skimming?

A

Businesses sometimes need a large profit to get back the high costs of research and development of the product.

125
Q

What is penetration pricing?

A

Setting a low price to attract customers to buy a new product.

126
Q

What are some advantages of penetration pricing?

A
  • Easier to become a market leader.
  • Encourage new customers to buy your product.
  • Benefit from economies of scale.
127
Q

What are some disadvantages of penetration pricing?

A
  • Can set unrealistic pricing expectations.
  • Can encourage an influx of customers who will not be loyal to the brand.
  • Can lead to poor customer experiences and hence negative publicity.
128
Q

What is competitive pricing?

A

Setting a price similar to that of competitors’ products which are already established in the market.

129
Q

What are some advantages of competitive pricing?

A
  • It’s easy to use.
  • There’s low risk (balance between staying competitive and making profit).
130
Q

What are some disadvantages of competitive pricing?

A
  • You can lose potential profits.
  • Your product may blend in with others.
  • It can be inaccurate.
131
Q

What is price leadership?

A

Smaller firms set their price based on the price set by the dominant firm in the industry.

132
Q

What do all kinds of promotional pricing include?

A

Pricing the product as low as possible for a limited period of time to get customers to buy.

133
Q

What are the types of promotional pricing?

A
  • Loss-leader pricing.
  • Buy-one-get-one-free.
  • Discounts.
134
Q

What is loss leader pricing?

A

Setting the price of a small number of products at a below cost to attract customers into the outlet in the hope that they will buy other products priced to earn profit.

135
Q

What are some disadvantages of loss leader pricing?

A
  • Revenue on each item is lower so profits may also be lower.
  • Customers May Leave After the Price Is Restored.
  • Customers May Get Accustomed to Discounts.
136
Q

What are some advantages of loss leader pricing?

A
  • Helps in Promoting Other Products in the Store.
  • Helps in Clearing Inventory.
  • A good way of increasing short-term sales and market share.
137
Q

What is cost-plus pricing?

A

Setting the price by adding a fixed amount to the cost of making or buying the product.

138
Q

What are the two types of cost-plus pricing?

A
  • Mark-up pricing.
  • Full-cost pricing.
139
Q

How is the price determined in these two different methods?

A

The price is set by adding a fixed amount - usually a percentage - to the cost of making or buying the product.

140
Q

What are some advantages of cost-plus pricing?

A
  • Quick and easy to work out the price.
  • Makes sure that the price covers all of the costs.
141
Q

What are some disadvantages of cost-plus pricing?

A
  • the price might be set higher than those of competitors, or then customers are willing to pay. This reduces sales and profits.
142
Q

How do businesses choose a pricing method?

A
  • Is it a new or an existing product?
  • Is the product unique?
  • Is there a lot of competition in the market?
  • Does the business have a well known brand image?
  • What are the costs of making and supplying the product?
  • What are the marketing objectives of the business?
143
Q

What is the demand?

A

The quantity of goods and services consumers are willing and able to buy.

144
Q

What is price elasticity of demand?

A

Measures by how much demand (sales) for a product changes when there is a change in its price.

145
Q

What is price inelastic demand?

A

The percentage change in demand is less than the percentage change in price.

146
Q

What is price elastic demand?

A

The percentage change in demand is greater than the percentage change in price.

147
Q

What is revenue?

A

The amount earned by a business from the sale of its products.

148
Q

How could we achieve the marketing objective of increasing revenue?

A
  • Increasing the price if the product has price inelastic demand.
  • Decreasing the price if the product has price elastic demand.
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Q
A
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Business (7 decks)

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