Unit 3 Flashcards
Decision Making to Improve Marketing Performance
Marketing
- Mutually Beneficial Exchange process where a business provides a god or service in exchange for something else (Usually money)
- Business gain profit - customer gains satisfaction
- Provides the link between customer and business
Relationship Marketing
An approach to marketing in which a company seeks to build long term relationships with its customers by providing consistent satisfaction. It focuses on customer retention rather than one off sales.
Market Analysis
involves examining the particular characteristics of a market such as market size and growth.
Helps managers understand the nature of the market they are operating in
Decision Making to Improve Performance in Marketing
Process Involves:
- Setting Marketing Objectives
- Understanding what customers want and can afford
- Understanding the conditions in the market
- Understanding what the capabilities and strengths of the business are relatives to competitiors
- Understanding how to best deliver benefits that customers are willing to pay for in ways where the business earns suitable returns
- Implementing Marketing Decisions
- Reviewing
The Marketing Process
Regularly go back and forwards
Set Marketing Objectives
|
Analyse Marketing data
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Make marketing decisions
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Implement Decisions
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Review
Ethics and Marketing
Business Ethics refers to whether the actions of a business decision are percieved as morally right or wrong.
Like all decisions, marketing decisions involve ethical issues:
- Should a business promote products at children? - pester parents to buy
- Should they produce and promote harmful products such as alchohol or cigarettes
- Should a buisness distribute sweets near schools due to obesity rates
Marketing Objectives
a measurable and time specific target set for the marketing function; for example, to increase sales by 10 per cent within 3 years
1) Sales Value and Sales Volume targets
Sales Value - Measures the level of sales in a given period in terms of amount spent e.g. sales of £30 000
Sales Volume - Measures the level of sales in a given period in terms of units sold e.g. 5 million cans or 200 000kg worth.
2) Sales Growth Targets
- percentage change in sales volume or value over a given period
- Measure how much they are increasing
3) Market Share
- Measures the sales of one brand or business as a percentage of total market sales in a given period
- Sales of this Product
———————————- X100
Total Market Sales
4) Brand Loyalty
- Retaining Customers is an important aspect
- Keeping customers is easier than attracting new ones
- Brands are valuable - can sell company for more
Internal Influences On Marketing Objectives
- Operations
- Existing Position
- Finance
- Human Resources
- Overall strategy and business objectives
External Influences on Marketing Objectives
- Political
- Human Resources
- Social
- Technological
- Competitve
Globalisation
Refers to the increasing trade between countries and the growing internationalisation of businesses
Pros:
Economic Growth
- Access to Labour
- Access to Jobs
- Access to Resources
Increased Global Co operation (work together)
Increased Cross - Border Investment
- enhance well fair on both sides of equation
Cons:
Increased Competition
Disproportiante Growth
- Increasing Migration (increasing gross domestic product)
Environmental Concerns
Market Research and Decision Making
Market Research - involves gathering and analysing data relevnat to the marketing process. According to the American Marketing Association ‘ Marketing research specifies the information required to address marketing issues, designs the method for collecting informaiton, manages and implements the data collection process, analyse the results and communicates the findings and their implications.’
Market Research
Who (buys, e.g. parents buy food, clothes, shoes)
What (Perfumes as present, newspapers or news)
Where (how to distribute)
What influences (Personal, Economical, Social, Technical)
Why (e.g. people buy chocolate as reward)
When (Seasonal Products)
Analysis
Planning;
Considering what activites to undertake
Implementation;
Deciding how best to undertake the activites
Control;
Reviewing the success of marketing activities
Market Research Can be used for:
- Analyzing existing position of business e.g. size of market, trends in sales and strength of competitiors
- Deciding marketing objectives
- Identifying possible actions that could be taken
- Assessing how effective marketing decisions have been
Marketing Researching Process:
- Identify and define what it is a business wants to find out
- Decide how to gather data (Amount of money, amount of time it will take, how accurate findings will be)
- Gather data
- Analyse Data
- Interpret findings and present them to inform decision making
- Gather data
Market Research and Competitiveness
Competitiveness - measures the extent to which a business offers good value for money relative to competitors. A business is competitive if it offers better value for money than rivals
Primary Marketing Research - collects and analyses data for the first time to use for marketing purposes
pros: Specific to business
Relevant up to date
Detailed
Cons: Expensive
Time consuming
difficult to collect
Secondary Marketing Research - collects and analyses data that already exists for markeitng purposes
Pros: Cheap
Quick to access
Cons: Not detailed specifically
Sampling
Interview target population (cant measure the whole target population due to it being too expensive and take too long therefore they must sample)
A sample - a group of people or items selected to represent the target population
Target Population - all the items or people that are relevant to the market research being undertaken. For example, a business might be interested in all 16 to 18 year olds in the UK
Value of Sampling depends on how it is conducted
- People or items selected
- Questions asked
- Sample Size
Types of Data
Quantitative provides data in numerical form (sales increase by 30%)
Qualitative provides data that is not in a numerical form and is descriptive - often describing why things have happened
Market Mapping ( ON paper)
analyses market conditions to identify the position of one product or brand relative to others in the market in terms of given criteria
Extrapolation
Making an estimation or conclusion by assuming that the existing trends will continue or a current method will remain applicable
E.g sales have grown 2 percent a year for the last five years a business may work on this assumption and ‘extrapolate’ sales forward on this basis
Valid way of forecasting sales, assuming conditions do not change.
E.g number of kids aged 11 in five years can be extrapolated from the number of kids aged 6 now however in every market there is disruptive changes that alter conditions
Confidence Levels and Intervals
Confidence Level - the probability that the research findings are correct
Confidence Interval - the possible range of outcomes for a given confidence level. For example, you might have a 95 per cent confidence level that sales will be between £500 000 and £700 000
the degree of confidence will depend on factors such as;
- The size of the sample, the bigger the sample the more likely it is that the findings will reflect the population
- How the sample was constructed; for example, were the people involved selected randomly
Price Elastictity of Demand
measures how responsive demand is to changes in the price, all other factors constant
Price and demand have inverse relationship
Elasticitity is how much less or how much more are they buying
If graph is perfectly horizontal that means it is perfectly elastic and if the price were to change no one would buy (infinite)
If the graph is perfectly vertical it is perfectly inelastic meaning the increase in price would not affect the demand for the product (0)
Unit elastic is when they go up or down the same and leads to a (1)
Price Elasticity of Demand
= % change in quantity demanded
————————————————
%Change in price
- Answer to the price elasticity of demand equation is usually because a price increase (+) leads to fall in quantity demanded (-) and vice versa; this gives negative answer overall
- The size of the price elasticity (i.e. the size of the number ignoring whether it is negative or positive) shows how responsive demand is to price
Inelasticity:
- E.g. Petrol
When petrol prices increase the demand falls but just a little and when it decreases the demand rises by just a little bit thereofre unresponsive to a change in price, this is because these types of products have very few subsitutes and is a necessity. This means the co efficient is <1
Factors Affecting Price Elasticity Of Demand:
Heavily branded product (more price inelastic)
Unique selling proposition (more price inelastic)
Patent Or Trademark (more price inelastic)
Expensive or difficult to switch to another supplier ( more price inelastic)
More substitutes available (more price elastic)
Over time (more price elastic)
Other influences on the price elasticity of demand:
- Time Period - over time customers will be able to search for more alternatives and so demand becomes more price elastic
- How expensive the product is. If it is cheap to begin with then customers may not be very sensitive to price as customers will still be able to afford the product.
- Who is paying for the product - if flights paid for by your company demand for flights is less sensitive to price than if you had paid yourself
Key Terms
A Brand - is a promise of an experience and conveys to consumers a certain assurance as to the nature of the product or service they will recieve
A patent - protects new inventions and covers how things work, what they do, how they do it, what they are made of and how they are made
A trademark - is a sign which can distinguish the goods and services of a business from those of its competitiors (a business may refer to its trade mark as its ‘brand’)
