Unit 3 Flashcards
what is marketing?
the process responsible for identifying, anticipating and satisfying customer requirements profitability
what are marketing objectives?
targets set to the marketing function to achieve the overall business objective
what is sales vloume?
the number of units sold
what is sales value?
how much the sales are worth
what is market share?
the proportion of a particular market that is controlled by an individual business.
how do you calculate market share?
( sales of the business / total market sales) x 100
what is market growth?
measures the change in size in a market as a %.
how do you calculate market growth?
(difference in size / earlier year) x 100
what types of markets are there?
- physical
- C2C
- local
- national
-B2B - e-commerce
what is the marketing team responsible for?
identifying consumer wants and satisfying these now and in the future through an integrated marketing mix
what is the first step of the marketing process?
to set marketing objectives. these are targets set to achieve by the department in a specific period of time. following SMART
what are the steps of the marketing process?
- define a main goal
- outline objectives
- break out objectives into tasks
- tie tasks to dates
what are marketing objectives likely informed by?
research and constrained by budgets. they will be used to select the marketing strategy and develop a marketing plan
how do you calculate percentage change?
((old-new) / old) x 100
what are the main marketing objectives?
- sales volume
- sales value
- sales growth
- market share
- market size
- brand loyalty
what are the reasons for setting marketing objectives?
- enable to achieve overall objective
- staff motivation
- evaluation of performance
how do you calculate sales growth?
(difference in sales / earliest year) x 100
how do you calculate market size?
(sales / market share) x 100
what are the external influences on marketing objectives?
- market and competition
- economy
- social factors
- ethics
- technology
what are the external influences on marketing objectives?
-finance available
- production capacity
- HR
- nature of the product
what is market research?
the process of gathering data on potential customers
what is the role of market research?
- competitor analysis
- customer feedback
- ideas for product development
- identify trends in market
- pricing strategies
- consumer needs
what is primary research?
the collection of information for the first time for specific purposes
what forms of primary research are there?
- surveys and polls
- interviews
- focus groups
- observations
- test marketing
what are the advantages of primary research?
- specific to business / product
- up to date
what are the disadvantages of primary research?
-cost
- time consuming
- poor validity
what is secondary research?
the collection of data that already exists and has been used for other purposes
what forms of secondary research are there?
- online research
- literature research
- case study research
what are the advantages of secondary research?
- low cost
- immediately available
- looks at market as a whole
what are the disadvantages of secondary research?
- not specific
- out of date
- accessible to competitors
what is qualitative market research?
research into attitudes and opinions of consumers that influence their purchasing behavior
what is quantitative market research?
collection of information on consumers views and behavior that can be analysed statistically
what is market mapping?
using a diagram to identify all the products in the market using two key features- e.g. price and quality
what does market mapping show to a business?
enables business to see where the market is concentrated and may show gaps in the market
what is sampling?
the selection of a representative group of consumers from a larger target population
what are the methods of sampling?
- random
- stratified random sampling
- quota sampling
what is random sampling?
selected by chance with no bias
what is stratified random sampling?
population is segmented into subgroups before randomly selected within subgroup
what is quota sampling?
segmented into subgroups before judgment is made in selecting respondents that represent subgroup
what is confidence interval?
the plus or minus figure used to show the accuracy of results arising from sampling
what is confidence level?
the probability that research findings are correct
what is the correlation between confidence interval and confidence level?
the high the confidence level, the wider the confidence interval
what is the value in using technology in gather and analysing data for marketing decision making?
means vast amounts of data can be collected, stored and analysed. gaining a greater understanding about the person buying a product.
what does correlation mean?
the statistical technique used to establish the extent of a relationship between two variables as the level of sales and advertising expenditure
what is a positive correlation?
when two factors move in the same direction
what is a negative correlation?
when two factors move in opposite directions
what is a strong correlation?
when it is easy to draw a line of best fit
what is a weak correlation?
when its hard to draw line of best fit. the weaker the correlation, the least accurate the data will be
what is extrapolation?
uses past data to extend an identified trend into the future. it is a useful technique when trends can clearly be identified and the market is relatively stable
when is extrapolation not suitable?
for industries subject to rapid change such as fashion and technology
what does elasticity mean?
a measure of the responsiveness of demand to a change in a variable
what is Price elasticity of demand (PED)?
a measure of how responsive demand is to a change in price
what is the calculation for PED?
%change in quantity demanded / %change in price
when is a product seen as elastic?
when the figure is -1 or below
-the % change in demand will be greater than % change in price
what are the implications of a price increase for an elastic product?
lead to a bigger % decrease in demand so the revenue will fall
what are the implication of a price decrease for an elastic product?
lead to a bigger % increase in demand so revenue will rise
what are the benefits of an elastic demand on a product ?
- can use price reduction for life extension
- can use sales to clear stock
when is product seen to be inelastic?
when the figure is between 0 and -1
- the %change in demand is less that the % change in price
what are the implications of a price increase for an inelastic product?
lead to a smaller % decrease in demand so revenue will increase
what are the implication of a price decrease for an inelastic product?
lead to a smaller % increase in demand so revenue will fall
what are the benefits of an inelastic demand on a product?
- charge higher prices
- do not use price reductions to promote
what are the factors influencing elasticity of demand?
- strength of brand
- necessity or luxury
- substitutes in market
- competition
what is Income elasticity of demand (YED)?
a measure of how responsive demand is to a change in income
what is the calculation for YED?
% change in quantity demanded / % change in income
what is it when YED is below -1?
elastic= means the %change in demand will be greater than %change in income. but a change in income would lead to an opposite change in demand
what is it when YED is between -1 and +1 ?
inelastic = means %change in demand is less than %change in income
what is it when YED is above +1?
elastic = means %change in demand is greater than %change in income
what is a luxury good?
a product or service that isn’t necessary
- elastic = above +1
what is a normal good?
a product or service that is a necessity
- inelastic = between -1 and +1
what is an inferior good?
a product or service that has a low perceived value
- elastic = below -1
why does income elasticity matter?
- if economy is doing well and incomes rise = faster growth in demand in products with positive and high YED
- during a boom, demand for inferior is likely to fall
what is market segmentation?
dividing the market into identifiable sub markets with their own customer characteristics
what is market targeting?
deciding which segment a business wants to operate in
what is market positioning?
where a particular brand stands in relation to other brands in the market
what is niche marketing?
when businesses identify and satisfy the demands of small segments of a larger market
what is mass marketing?
when businesses aim their products at most of the available market
what is the STP process?
- segmentation
- targeting
- positioning
what types of segmentation are there?
- demographic
- geographical
- behavioral
-income
what are the benefits of market segmentation?
- identifying the group most valuable to the business
= brand loyalty
= repeat customers
= profits
= price sensitivity
what are the drawbacks of market segmentation?
- cost of research
- cost to develop product range
- production costs
what are the benefits of niche marketing?
- meet customer needs
= brand loyalty means they can rise prices - small production volume
what are the drawbacks of niche marketing?
- limited opportunity for market growth
- specific niche = risk
- inability to gain economies of scale
what are the benefits of mass marketing?
- less research
- indicates business is high focus on volume of sales = econ of scales
- smaller product range = low cost per unit = profit margin increase
what are the drawbacks of mass marketing?
- avoided segments
- larger market = reducing price = more comp
- digital marketing
- mass production cost
what does positioning help with?
decides on product specification, price, where to sell and how to promote.
= marketing mix
what is the marketing mix?
putting the right product in the right place, at the right time, and at the right price
what are the 7 P’s in the marketing mix?
- Product
- Price
- Place
- Promotion
- People
- Process
- Physical environment
what is industrial products?
bought for further processing or for use in conducting a business
what is a unique selling point?
Refers to differentiating factors that allows a business to differentiate its product or service from others in the market
what is a consumer product?
product brought by the final customers for personal use or consumption
what is a convenience product?
- widely available
- bought on impulse
- no planning
- low customer involvement
what types of consumer products are there?
- convenience products
- shopping product
- specialty product
what is an industrial product?
product brought by other businesses for further processing or to be used in the business activity ( transformation process)
what is an industrial product?
product bought by other businesses for further processing or to be used in transformational process
what are internal influences on consumer products?
- efficient operations = lower prices
- targets set by managers
- people = staff to develop market share
- finance
what are the external influences on consumer products?
- PESTLE +C
what is a specialty product?
- take longer to process a decision
- willing to travel to buy
- high involvement
- staff involved in purchase is important
what is product development ?
the process of developing new products or improving existing ones and then bringing them to the market.
= Research and development
what are the phases in research and development?
1) idea generation
2) develop
3) testing
4) modify
5) launch
what is product development?
selling the different products to the same market segments
what are internal factors influencing new product development ?
- research facilities
- finance
- time
- staff expertise
- strategy
what are external factors influencing new product development?
- market research
- competitors
- shareholders attitudes to risk taking
what examples of product development are there?
- repackaging
- performance improvement
- quality improvement
what are the pros of market development?
- increase sales and revenues
- opportunity to price skimming
- long term strategy
- sell to different market segments
what are the cons of market development?
- cost and risk of failure
- low volume of output and no economies of scale
what is the importance of a USP?
add value by creating a USP for their products and allows businesses to differentiate from other competitors
- encourage brand loyalty
- able to charge higher price
what is the product life cycle?
a graph that tracks sales of each individual product over time
what are product life extension strategies?
marketing actions taken to prolong the life of a product
what does a product life cycle help monitor?
track sales ($) and volume of units of an individual product over time
what are the stages in the product life cycle?
- research and development
- introduction
- growth
- maturity
- decline
what are characteristics in the research and development stage in the product life cycle?
- no sales and no revenue
- high cost
= negative cash flow
what are characteristics in the introduction stage in the product life cycle?
- low sales
- marketing costs
= negative cash flow
what are characteristics in the growth stage in the product life cycle?
- improved sales
- marketing cost
= positive cash flow
what are characteristics in the maturity stage in the product life cycle?
- peak sales
= positive cash flow
what are characteristics in the decline stage in the product life cycle?
- declining sales
= declining revenue
what are the pros of using the product life cycle to make marketing decisions?
- tracking
- prompts extension
- helps managers plan
- suggests adaptations of marketing mix
what are the cons of using the product life cycle to make marketing decisions?
- each product has diff cycle
- not clear where it is
- doesn’t explain changes in sales
- short term = unhelpful
- doesn’t forecast
what strategies of extension are there for products?
- advertising
- reducing price
- adding value
- entering new markets
- changing packaging
what is a product portfolio?
the range of products that a business sellsw
what is an ideal product portfolio?
- have products in each major stage of life cycle
= constant flow of income to fund new products to support growth
what does the Boston matrix represent?
allows businesses to plot their products on a grid or matrix according to each products market share and its market growth
what are the four categories of products on the Boston matrix?
- Dog
- Question marks or problem child
- stars
- cash cows
where is the Dog on the boston matrix?
- Low market share and low market growth
what strategy should a business do with a ‘dog’ product?
remove this product from the market depending whether it is making a loss and how important it is to the brand
where is the question mark or problem child on the boston matrix?
low market share and high market growth
what strategy should a business do with a question mark or problem child product?
monitor this product as it has potential to become a star, if product doesn’t achieve its potential market share it will become a dog
where is the star on the boston matrix?
high market share and high market growth
what strategy should a business do with a ‘star’ product?
invest in this product as it has potential for further growth. keeping its high market share is key to ensure it becomes cash cow in future
where is the cash cow on the boston matrix?
high market share and low market growth
what strategy should a business do with a ‘cash cow’ product?
maintain this profitable products market share but not spending too much on it as sales are unlikely to grow significantly
what are the benefits of using the boston matrix?
- suggests a strategy for each type of product
- shows if portfolio is balanced or not
- sustainability of the business
what are the weaknesses of the boston matrix?
- some products could be borderline
- doesnt always lead to right decision
what is price?
money charged for a product or service
what are pricing strategies?
pricing decisions adopted over the medium to long term to achieve marketing objectives
what are pricing tactics?
pricing decisions adopted in the short term to suit particular situations
what is dynamic pricing?
where firms set flexible prices for products or services based on current market demands. increasingly sophisticates e-commerce systems make much wider use of dynamic pricing.
what is price skimming?
involves setting an initially high price to maximise profit then lowering the price in the future
what is penetration pricing?
the opposite to price skimming, setting initially lower prices then increasing it
what is cost-plus pricing?
determined by adding a % markup to the cost of producing a product
what is pricing methods?
the methods used to calculate the actual price set
what are the influences on pricing decisions?
- marketing mix
- demand
- state of economy
- power of customers
- costs
- supply
- quality
- competitors
what is loss leader prices?
a product sold at a loss to attract customers
what is psychological pricing?
based on theory = making it seem better value
what is competitor pricing?
business sets price on prices of direct competitors
what is distribution?
the component within the marketing mix that defines both physical location and distribution channel its travelled through, from manufacturer to consumer
what is distribution channel?
the route to market that a product takes from producers to the final customer. it will affect the number of intermediaries and hence the price for consumers
what are intermediaries?
the middle people within distribution channels such as wholesalers and retailers
what are wholesalers?
an intermediary that buys in bulk and se;;s to resellers rather than consumers
what is multi-channel distribution?
where businesses use more than one type of distribution channel
what is traditional distribution?
producer–wholesaler–retailer–consumer
what are the pros of traditional distribution?
- wholesale buys in bulk = high sales
- low risk
- includes retailer = low marketing cost
what are the cons of traditional distribution?
- wholesaler and retailer seek margins
- less able to provide effective customer service to consumer
what is modern distribution?
producer–retailer–consumer
what are the pros of modern distribution?
- ways to overcome high marketing costs
what are the cons of modern distribution?
- high distribution costs
- wont receive full price
what is direct distribution?
supplier–consumer
what are the pros of direct distribution?
- no wholesaler to take profit
what are the cons of direct distribution?
- high distribution costs
- high marketing costs
- sales in lower volume
what are the factors deciding the type of distribution?
- type of product
- control over promotion
- cost of distribution
- customer expectations
- geog location
what is e-commerce?
buying and selling of goods and services online
what are the pros of e-commerce?
- open 24/7
- larger market
- low cost = no physical stores
- cheaper marketing
what are the cons of e-commerce?
- cost of customer service and returns
- cannot try and test
- risk of excluding customers
- easy comparing competitors
- ICT upkeep and marketing cost
what is m-commerce?
buying and selling goods and services using a mobile phone
what are the pros of m-commerce?
- allows tp make purchase anywhere
- doesnt require PC
what is promotion?
the component of the marketing mic=x that attracts, informs and persuades customers about the product in order to sell that product
what are the cons of m-commerce?
-customers missed out
- requires app set up
- hacking?
what is the promotional mix?
the combination of promotional activities that a firm uses in order to create consumer awareness and generate sales
what is advertising?
a paid form of non-personal communication using mass media to change the attitudes and buying behavior of consumers
what is sales promotions?
special offers reducing the price of a product or service
what is merchandising?
in- store promotional activities at the point of sale
what is personal selling?
a visit from a business’ sales representative to a potential customer
what is public relations (PR)?
the media attention generated through a third part such as a magazine or review from a blogger
what are the influencing factors on promotional mix?
-target audience
- type of product
- position on product life cycle
- finance
- competitors
- technology
what is a brand?
a unique and recognized feature of a business or product. allows to gain competitive advantage through differentiation
what is digital marketing?
refers to any online marketing methods
what is the ‘people’ part of the marketing mix?
the people who make contact with customers in delivering the product
what is the ‘process’ part of the marketing mix?
the systems and processes that deliver a product to a customer
what is the ‘physical’ part of the marketing mix?
the elements of the physical environment the customer experiences
what is an integrated marketing mix?
the individual elements complement each other to communicate a coherent message to customers
what are the key influences on the marketing mix?
- product life cycle
- boston matrix
- types of product
- marketing objectives
- target market
- competition
- positioning
