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Business > Unit 3 > Flashcards

Unit 3 Flashcards

1
Q

What are marketing objectives?

A

The specific goals of the marketing department, must be in line with the firms overall corporate objectives.

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2
Q

Examples of marketing objectives.

A

Sales volume and sales value.
Market size.
Market and sales growth.
Market share.
Brand loyalty.
Launch new product.

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3
Q

What is sales growth?

A

% Change in sales over a period of time.

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4
Q

What is the equation for sales/market growth?

A

(New size - og size)/og size.

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5
Q

What is the equation for market share?

A

Sales of one brand/total market sales.

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6
Q

Evaluate primary marketing research.

A

+ Relevant to purpose.
+ Up to date.
+ Kept private.
+ More detailed insights.
- Time consuming.
- More expensive.
- Sample may not be representative.
- Risk of survey bias.

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7
Q

Evaluate secondary market research.

A

+ Quick and easy.
+ Cheap.
+ Good source of market insights.
- Less relevant to purpose.
- Could be incorrect.
- May be old/out of date.
- Specialist reports can be costly to access.

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8
Q

What is quantitative data?

A

Data expressed in numbers.

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9
Q

What is qualitative data?

A

Data expressed in words e.g. opinions, attitudes.
Understands why customers feel that way.

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10
Q

Evaluate qualitative data.

A

+ Focus on understanding customer.
+ Essential for important new product development.
- Based on opinion not fact.

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11
Q

Evaluate quantitative data.

A

+ Easy to analyse.
+ Provides insight into trends.
+ Easy to/can be compared.
- Doesn’t have a why or opinion.
- May lack reliability if sample size and method is not valid.

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12
Q

Describe random sampling.

A

All people have an equal chance of being selected.

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13
Q

Evaluate random sampling.

A

+ Simple method, made easier with technology.
- Finding an ‘accurate’ list usually includes some sort of bias.

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14
Q

Describe quota sampling.

A

Sample chosen that aims to represent whole population.
Divided by key characteristics.
People asked which they fit into and once quota is filled no more are asked.

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15
Q

Internal influences on marketing objectives.

A

Overall strategy of the business.
Ambitions.
Existing position.
Amount the business can produce.
Finance.
Employees.

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16
Q

External influences on marketing objectives.

A

Economic changes.
Globalisation - developing international influence.
Social changes.
Technological changes.
(PESTLE)

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17
Q

What insights does marketing research give you.

A

Dimensions of the market.
Competitors strategies.
Needs, wants and expectations of customers.
Market segments - existing and new.

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18
Q

Define price elasticity of demand.

A

Measurement of the extent to which the quantity of a product demanded is affected by the a change in price.

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19
Q

How to calculate PED.

A

%change in quantity demanded/%change in price.

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20
Q

What does a PED value of >1 mean?

A

Price elastic.
Price changes greatly affect the demand of a product or service.

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21
Q

What does a PED value of <1 mean?

A

Price inelastic.
If price changes, customer buying habits stay relatively the same.

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22
Q

What does a PED value of exactly 1 mean?

A

Unitary price elasticity.
A given % change in price leads to an equal % change in quantity demanded or supplied.

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23
Q

Factors which often mean a good or service is price inelastic.

A

Brand strength.
Necessity.
Habit.

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24
Q

How does availability of substitutes affect price elasticity.

A

If lots of alternatives are available price is more likely to be elastic.

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25
Q

How does time affect price elasticity.

A

Short term - price changes tend to have less impact (less elastic).

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26
Q

Define income elasticity of demand.

A

Measurement of the extent to which the quantity of a product demanded is affected by a change in income.

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27
Q

Calculation for income elasticity of demand.

A

%change in quantity demanded/%change in income.

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28
Q

How does YED affect normal products.

A

Rise/fall in income results in rise/fall of demand.

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29
Q

How does YED affect luxury products.

A

YED >1.
Income grows,proportionally more is spent on luxuries.
E.g. holidays.

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30
Q

How does YED affect necessities?

A

YED <1.
As income grows proportionally less is spent.
For inferior goods (store brands) demand falls as better alternatives are bought.

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31
Q

Name the 4 ways to segment a market.

A

Demographic - age, gender, religion etc.
Geographic.
Income.
Behavioural - benefits customers seek from products/ways they use them.

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32
Q

What is the first stage of market segmentation?

A

Choose which customers to serve.

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33
Q

What is the second stage of market segmentation.

A

Decide how to serve those customers e.g. USP, market positioning.

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34
Q

Define market segmentation.

A

Dividing a market into parts that reflect different customer needs and wants.

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35
Q

What are the benefits of market segmentation?

A

Focus resources on parts of a market where the business can succeed.
Allow business to grow market share.
Helps new product development.
Makes marketing mix more effective e.g. better targeting of promotion.

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36
Q

Drawbacks of market segmentation.

A

Data may not always be available or reliable.
Just because you can identify a segment, doesn’t mean you can reach the customers.
Markets are increasing dynamic.

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37
Q

Define mass marketing.

A

Selling to the largest part of the market.

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38
Q

Define product.

A

The product or service that the customer buys.

39
Q

Define Place.

A

How the product is distributed to the customers.

40
Q

Define price.

A

How much the customer pays.

41
Q

Define promotion.

A

How the customer is found and persuaded to buy.

42
Q

Define people.

A

Who makes contact with customers in delivering the product.

43
Q

Define process.

A

The systems and processes that deliver a product to a customer.

44
Q

What is physical environment?

A

The elements that the customer experiences.

45
Q

What are consumer products?

A

Bought by final consumer for personal consumption.

46
Q

What are industrial products?

A

Bought to be used in further processing or for use in conducting a business.

47
Q

What is a convenience product?

A

Bought frequently with little planning and no effort.

48
Q

What is a shopping product?

A

Bought less frequently.
Customer is more careful on sustainability, quality, price etc.
E.g. hoodie.

49
Q

What is a speciality product?

A

Unique characteristic of brand.
Buyers make a special effort.

50
Q

Define the product life cycle.

A

A theoretical model which describes the stages a product goes through over its life.

51
Q

What are the 5 stages of the product life cycle?

A

Development.
Introduction.
Growth.
Maturity.
Decline.

52
Q

Describe the growth stage of the product life cycle.

A

Expanding market but arrival of competitors.
Fast growing sales.
Cash flow increases.
Unit costs fall with economy of scale.

53
Q

Describe the maturity stage of the product life cycle.

A

Sales growth slows as rivals enter market.
Cash flow could be strongly positive.
Weaker competitors leave market.
High profit if high market share.

54
Q

How can a business extend the product lifestyle?

A

Lower price.
Change promotion.
Restyle/improve product.Develop new market segment.
Reposition the product.

55
Q

What are the 4 stages of the Boston matrix?

A

?.
Stars.
Dogs.
Cash cows.

56
Q

What is market growth.

A

% rate of growth in sales in the market.

57
Q

What is relative market share.

A

Not expressed as a %.
Share in relation to other firms share.
Measure of strength in the market.

58
Q

What are ? products?

A

Low share of rapidly growing market.
Cash flow negative.
Have potential but future is uncertain.
Could become a star or dog.

59
Q

Describe star products.

A

High share of a rapidly growing market.
Position of leadership in a high growth market.
Net cash flow is neutral or positive.

60
Q

Describe cash cow products.

A

High share of slowly growing market.
Ature stage in product lifestyle.
Little potential for growth.
Large positive cash inflow.

61
Q

What are dog products?

A

Failed or declining products.
Low share of slowly growing market.
No real potential.

62
Q

Describe cost-plus pricing.

A

Cost is an important influence.
Make up price from costs.

63
Q

What are the benefits of cost plus pricing?

A

Easy to calculate.
Price increase justified if costs increase.

64
Q

What are the drawbacks of cost-plus pricing.

A

Ignores PED.
May not consider competition.
Profit is lost if set below what customer is willing to pay.
Sales lost if too high.

65
Q

What is price skimming?

A

Set high price to maximise profit.
Product sold to different market segments at different times.
Top segment skimmed off first with highest price.

66
Q

Describe penetration pricing.

A

Offer product at a low introductory price.
Price increased once target market share reached.

67
Q

What are the aims of penetration pricing?

A

Gain market share quickly.
Build customer loyalty.
Build sales of higher priced related items e.g. razor blades.

68
Q

What is the promotional mix?

A

Advertising.
Sales promotion and merchandising.
Personal selling.
Publicity.
Direct marketing.

69
Q

What is advertisement?

A

Paid for communication.

70
Q

Influences on promotion.

A

Promotional budget.
The message.
Technology available.
Target audience.

71
Q

What is the importance of branding?

A

A brand represents a promise by a business to provide a specific set of benefits.
Customers recognise a brand by name/logo and distinguish it from the competition.

72
Q

What is sales promotion?

A

Incentives designed to stimulate purchases.
Short term to increase sales.

73
Q

What is a distribution channel?

A

Moves a product through production to final consumption.

74
Q

What is multi channel distribution?

A

Using more than one distribution channel.
E.g. apple has online stores, retail stores and retail partners.

75
Q

What is direct distribution?

A

Channel where a producer and consumer deal directly with each other.
No involvement of an intermediary.

76
Q

What is indirect distribution.

A

Involves use of intermediaries.

77
Q

Why would a business use indirect distribution?

A

Customers live too far.
Better use of resources would be somewhere else.
Lack of retailing expertise.

78
Q

What are the benefits of multi channel distribution?

A

Allow more target market segments to be reached.
Higher revenues.
Customers increasingly expect products to be available via more than one channel.

79
Q

What are the drawbacks of a multi channel distribution?

A

Potential for channel conflict - competing with retailers by also selling direct.
Can be complex to manage.
Danger that pricing strategy gets confused.

80
Q

How does people affect business?

A

Contact will have a major impact on customer service and therefore brand image.

81
Q

What is extrapolation?

A

Using the trends established from historical data to forecast the future.

82
Q

What are confidence intervals?

A

Gives a the percentage probability that an estimated range of possible values includes the actual value.
Evaluates the reliability of a particular estimate.

83
Q

What is a focus group?

A

A group is asked about their opinions, beliefs and attitudes towards a product, service, concept, advert etc.

84
Q

What is sampling in market research.

A

Involves gathering of data from a sample of respondents.
The results should be representative of the population.

85
Q

What are the benefits of sampling.

A

Even a small sample (if representative) can provide useful research insights.
If used before marketing decisions can reduce risks and costs.
Sampling is flexible and relatively quick.

86
Q

What are the drawbacks of sampling.

A

If unrepresentative can lead to incorrect conclusions.
Risk of bias in research questions.
Less useful in market segments where tastes and preferences are changing frequently.

87
Q

Define primary research.

A

Data collected first hand for specific research purposes.

88
Q

Define secondary research.

A

Data that already exists and has been collected for a different purpose.

89
Q

What is test marketing?

A

Replicating all elements of a product launch to a specific planned smaller geographic region or demographic group to judge the viability of the product before launch.

90
Q

What is an advantage of technology?

A

Data can be analysed fast and in greater depth.
Customer data can be constructed.

91
Q

What are the drawbacks of technology in analysing data?

A

Too much data can be hard to analyse.
Tends to be misunderstood.
Can be costly to acquire required technology.

92
Q

Evaluate quota sampling.

A

+ Quick and cheap.
- Not random as not an equal chance of being selected.
- May develop bias - if individual is not in right place at right time there is no chance of being surveyed.
- Cannot accurately predict population of a whole population.

93
Q

What is stratified sampling?

A

Participants are selected in proportion to specific sub groups that represent the target market.

94
Q

Evaluate stratified sampling.

A

+ More suitable for mail, phone surveys etc.
+ Should be less biased and accurately reflect the target population.
+ Tech often used to randomly select.
- Can take lots of time and effort.
- Costly.

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