Unit 3 Flashcards
What is marketing ?
The function that provide the link between the business and the consumer.
The process responsible for identifying, anticipating, and satisfying customer requirements
What are the 3 main marketing objectives ?
- increase Sales volume (number of units sold) and sales value
- increase market share
- increase brand loyalty and increase revenue
Why are setting marketing objectives important ?
+ target setting
+ motivation
+ evaluation of performance
How do you calculate market share ?
(Sales of the firm / total market sales) x100
How do you calculate sales growth ?
(Difference in sales / earliest year) x100
How do you calculate market growth ?
(Difference in total market sales / earliest year) x100
How do you calculate market size ?
(Sales / market share) x100
What are some external factors that can influence marketing objectives and decisions ?
Market and competition
Economic factors (economic cycle, interest rates)
Social factors (consumer tastes, fashion change)
Ethics & Environmental issues
Technology
What are some internal factors that affect marketing objectives and decisions ?
Finance (budget)
Production capacity
Human Resources (market growth may be dependent on the skills of the workforce and the availability of labour)
Nature of product (innovative products have more scope for growth than staples such as bread and fuel)
What does market research involve ?
. Studying market trends and characteristics
. Analysis of market shares and potential existing products
. Sales forecasting for products
. Analysis and forecasting of sales of new products
What are some examples of primary research ?
- surveys
- observations
- focus groups
- test marketing
What is the main advantage of primary research ?
It is directly related to the specific needs of the business
What’s a disadvantage of primary research ?
Published reports
Government & other agencies
Internet
What is qualitative data ?
Reveals consumers attitudes, opinions, and reaction to:
-products
- pricing
- packaging
- branding
What is an advantage of qualitative data ?
It might enable a business to design products that are more appealing to consumers
What is quantitative data ?
The collection of consumer views that can be analysed statistically, represented through charts and graphs showing:
- sales
- size of the market
- the prices consumers are prepared to pay
What is market mapping ?
Enables a business to identify the position of its product in relation to others in the market.
What are the two key features of the product identified through market mapping ?
Price & quality
why do firms do sampling ?
collecting data from all its potential customers would be too expensive and time-consuming
what is random sampling ?
this is when each member of the population has an equal chance of being included
what is stratified sampling ?
this is when the population separated into segments
what is quota sampling ?
this is when the population is split into a number of groups each sharing common characteristics
what is the main factor that influences sampling ?
finance available
what is correlation ?
a statistical technique used to establish the extent of a relationship between 2 variables
what is a confidence interval ?
is the + or - figure that is used to show the accuracy of results arising from sampling
why do businesses use confidence intervals ?
because they cant be 100% certain about market research findings
what is a confidence level ?
is the probability that research findings are correct
what is extrapolation ?
analyses past performance of a variables (e.g. sales) and the extends the trends into the future for prediction
what is value of technology in gathering and analysing data for marketing purposes ?
provides faster communication
makes forecasting easier
enables targeted sales messages
what does elasticity refer too ?
the responsiveness of demand to a change in price or income
if the PED is greater than 1 is it elastic or inelastic ?
elastic demand
if the PED is less than 1 is it elastic or inelastic ?
inelastic demand
what are some other factors influencing marketing decisions other than the elasticity of the product ?
+ brand loyalty
+ competitor actions
+ consumer tastes and fashion
+ availability of substitutes
what is market segmentation ?
is the process of dividing the market into distinct groups.
(customers in a specific group will share similar characteristics)
what is market targeting ?
is when a business targets its marketing at a specific market segment or target market.
what is marketing positioning ?
refers to how a consumer views an individual brand relative to other competing brands
what are the 3 main influences on target marketing and positioning ?
. the nature of the product
. competition
. the consumer
what is a niche market ?
when a business identifys and satisfys the demands of small segments of a large market
what is a mass market ?
when a business aims to identify and satisfy the demand of most of the available market
what are the benefits of niche marketing ?
+ may benefit from price skimming
+ can be highly profitable
+ customer loyalty
what are the drawbacks of niche marketing ?
- if profitable, could attract competition
- may be difficult to generate acceptable profit
what is the marketing mix (definition) ?
the combination of marketing activities that an organisation engages in to best meet the needs of its targeted market for a specific product.
what are the 7ps of the marketing mix (elements) ?
Place
Price
Promotion
Product
People
Process
Physical environment
what are the 4 influences that managers will take into account when designing the marketing mix for a ?
Technology
Finance
Market Research (primary or secondary research)
Nature of the Product (which elements are emphasised)
what are the main influences upon the development of new goods and services ?
Technology
Competitor actions
Entrepreneurial skills of managers
what does a USP allow ?
it allows a business to differentiate its products for those of there competitors
what are the main benefits of a USP ?
+ the business can base its advertisement around the USP to emphasise their differentiation
+ encourages brand loyalty
+ ability to charge a premium price
what is the product lifecycle ?
the theory that all products follow a similar pattern throughout their lifetime.
what are the 6 different stages of the product lifecycle ?
1). Development
2). Introduction
3). Growth
4). Maturity
5). Decline
6). extension strategies?
what happens in the developmental stage of the product lifecycle ?
firms undertake research and development to create new products that will be their future best sellers.
what happens in the introduction stage of the product lifecycle ?
commence of the products initial appearance on the market.
sales should begin to rise, however costs will remain high (promotion). cashflow is negative.
what happens in the growth stage of the product lifecycle ?
sales rise rapidly , and the firms cash flow improves considerably.
what happens in the Maturity stage of the product lifecycle ?
the sales curve peaks and begins to decline.
cashflow and profits begin to decline. (intense competition)
competitors improve and differentiate their products to react.
what happens in the Decline stage of the product lifecycle ?
sales fall rapidly
due to new technology or new products in the market
promotional efforts will be cut.
why do firms use extension strategies ?
an attempt to prolong the life of a product as i enters he decline stage
what are the 2 main extension strategies ?
Finding new markets for existing products
(targeting less economically developed countries)
Changing the appearance or packaging of the product
what is the Boston Matrix ?
allows businesses to undertake product portfolio analysis based on the products market growth rate and its market share.
what are the 4 categories that products on the Boston Matrix are placed into ?
Star products (high MS, high MG)
Cash Cow products (high MS, low MG)
Dog products (low MS, low MG)
Problem child products (low MS, high MG)
what are the main conclusions to be made from the Boston Matrix ?
. firms should avoid having too many products in one single category
. products in the top half of the Matrix are in their early stages of the product life cycle
. continuing production of cash cows will provide the necessary cash to develop newer products
. firms need problem child’s as they may become tomorrows cash cows
What are pricing strategies ?
The medium to long term pricing plans that a business adopts.
What are the 4 common price strategies ?
Price skimming
Penetration pricing
Price leadership
Price taking
When is price skimming used ?
The introduction of a new, innovative product.
And it is unlikely that the product will face intense direct completion directly.
What is price skimming ?
When a business initially sets a high price for its product, and then lowers when competitors enter the market.
When is penetration pricing used ?
When there are firms entering the market with similar products to those that are readily available.
What is penetration pricing ?
When the price for a businesses product is set deliberately low as a foothold in the market. Once the other product is established the price can be gradually increased to regather higher profit margins.
When is price leadership used ?
For established product with strong brand images.
What is price leadership ?
Where the business sets a price they are willing to sell their product at and due to the products strong brand image, competitors will follow this price.
Which type of businesses will usually use the price-taking strategy ?
Small to medium sized businesses
What is the price-taking strategy ?
Businesses will set the price of their product equal to the going rate in the market.
What are pricing tactics ?
Are a series of pricing techniques that are normally used only over the short-term to achieve specific goals.
What are the 2 main pricing tactics ?
Loss Leaders
Special-offer pricing
What are loss leaders ?
Setting prices very low (often below the cost of production) to attract customers. Businesses do this in the hope that will attract customers into the shop to buy other products at their full-price.
What is special-offer pricing ?
This involves reducing price for a limited period of time.
What is the main factor that influences pricing decisions ?
Price elasticity of demand
(PED)
What is PED ?
Measures the responsiveness of the demand for a product to changes in price.
How can businesses make their products more price inelastic ?
. Differentiating products from those of competitors
. Rescuing competition through takeovers/mergers
What is promotion ?
Is bringing consumers attention to a product or business.
What are some promotional aims ?
+ to attract new customers and retain existing customers
+ to improve the position of the business in the market
+ to ensure survival and growth of the business
+ to increase awareness of a product
What is the promotional mix ?
A combination of methods used by the business to communicate with prospective consumers to inform them of their products and to persuade them to buy these products.
What does the promotional mix consist of ? (8)
Advertising
Exhibitions (staged events)
Packaging
Branding
PR
Merchandising
Personal selling
Sales promotion
What influences businesses choice on the type of promotion used ?
. Products position in the life cycle
. The type of product
. Finance/budget
. Where consumers purchase the product/service
.competitiors actions
What are the 3 main factors that businesses might take into account when choosing outlets and distributors ?
. Location
. Credit terms
. Willingness to display products in prominent positions
What are 3 different types of distribution channels ?
Traditional
Modern
Direct
What is the traditional distribution channel ?
Producer -> wholesaler -> retailer -> consumer
What is the modern distribution channel ?
Producer -> retailer -> consumer
What is the direct distribution channel ?
Producer -> consumer
What influxes the choice of distribution channel for businesses ?
. The type of product
. The nature of the market
. The technical complexity of the product
Why is the people segment of the marketing mix so crucial ?
People involved in selling a service or product are crucial and can make or break a sale
A customers first impressions of a business
Employees should be well trained at motivated, and good customer service can enhance a businesses reputation, provides a USP, and can increase brand loyalty
Why is the process segment of the marketing mix so crucial ?
The efficiency of a business can reduce costs and increase revenue and sales
Why is the physical environment segment of the marketing mix so crucial ?
The location of a store should reflect the nature of the product, giving the right impression to consumers
What is an integrated marketing mix ?
A marketing mix that works together
E.g. if a business is selling a premium product, the entire mix should support this
What are a number of influences on a market mix ?
Position of the product in its lifecycle
Boston matrix
Type of product
Marketing objectives
Target market
Competition
Positioning
Position in the product lifecycle
How has advances in technology benefited businesses ?
Access to a larger amount of detailed information about consumers, in order to build relationships with them
Greater contact between consumers and businesses allowing consumers to build their own products and give reviews of products or services purchased.
How has digital marketing benefited businesses ?
Has made it easy for any business to set up and sell almost anywhere in the world
What is the operational functions responsibility ?
Actual production of a good or service
Managing the process of transforming inputs into outputs
What is added value ?
The value of the final output will be greater than the value of all the input added together.
What are the 4 main operational objects ?
. Reduced unit costs (greater capacity utilisation, greater productivity)
. Quality targets
. Sipped of response and flexibility
. Environmental objectives
What are the main external influences on operational objectives ?
. Political or legal influences
. Economic influences
. Technological influences
. Competitive influences
What are the main internal influences on operational objectives ?
. Finance/ budget
. Marketing (product/ quantities)
. Human Resources (skills of workforce)
What are the 4 main measures of operational performance ?
+ capacity
+ capacity utilisation
+ labour productivity
+ unit costs
What is the calculation for capacity utilisation ?
(Actual output / maximum possible output) x 100
What is the calculation for labour productivity ?
Output / number of workers
What is the calculation for unit cost ?
Total cost / units of output
Why is operating at higher capacity utilisation a good thing ?
Less waste and more output per worker, leading to a decrease in unit costs
Why is operating at higher capacity utilisation a bad thing ?
Leaves less room for flexibility
How can you increase efficiency and labour productivity ?
. Investment in technology
. Improvements in training and motivation
. Job redesign
. Reduction in labour force
What is lean production ?
Focuses on reducing waste in terms of time, space, ad resources.
What is JIT (just in time management) ?
Goods are only revived when they are needed.
What are the benefits of just in time management (JIT) ?
+ reduced waste in terms of damaged stock
+ recused space and staff due to less warehousing
+ greater flexibility in terms of responsiveness to changes in taste or fashion
What are the drawbacks of just in time management (JIT) ?
- running out of stock
- opportunities for bulk buying (economies of scale, decrease in AC cost)
- dependent on trust with your supplier
What are the main difficulties of increasing efficiency and labour productivity ?
- cost (new technology and training is expensive, and new higher skilled staff may require higher pay)
- quality (when attempting to improve labour productivity this can sometimes come at the cost of quality)
- resistance of employees (sometimes employees can be resistant to change, especially where job security is a concern)
What is capital intensive approach ?
A high level of capital equipment used and a lower emphasise on human capital
What is labour intensive approach ?
A high level of emphasis on labour and less emphasis on capital equipment
What is the main influence on the type of labour approach a business will use ?
Cost of labour in that country
If the demand is too high for that business, and therefore they are facing a problem of low capacity, what strategies could they consider ?
+ outsourcing
+ investment (into expanding capacity)
+ reducing demand (increasing price)
What are some technological developments that may affect production ?
. More advanced computer systems (e.g. automated rock control system)
. The internet (enhance the businesses ability to communicate with customers)
. Computer-aided manufacture (where manufactures use robots as an integral part of production process)
Such improvement will complement larger scale systems
What are the benefits of new and updated technology ?
+ rescues unit costs of production (increasing the competitiveness of the business
+ ability to charge a premium price
+ potential for consistent quality
+ technology can allow employees to work more efficiently
+ access to new international markets
+ can rescue waste
Costs of new technology ?
+ it can drain the businesses capital (training of new employees, capital Is expensive
+ its introduction may be met with opposition from employees, especially if job security is threatened
