Unit 3 Flashcards
Marketing management
What is marketing?
The purpose of marketing is to increase sales by identifying, anticipating and satisfying customers’ requirements profitably.
What is marketing overall all about?
Identifying and understanding the market in which you trade / wish to trade:
- so that you sell (more of) the right product or service
- in the right place
- at the right price
- your customers know all about it (and love it)
What is a market? + give examples
A market is where buyers and sellers transact.
- C2C (customer to customer)
- B2B (business to business)
- Local business
- National business
- Physical
- E-commerce
What is the marketing process?
1) Setting marketing objectives
2) Understanding what customers want and can afford
3) Understanding the conditions of the market
4) Understanding internal strengths
5) Understanding how best to deliver added value to customer
6) Implementing marketing decisions
7) Reviewing
What are marketing objectives?
Targets set to the marketing function to achieve the overall business objective.
- Are likely to be informed by research and potentially constrained by budgets (money available in the marketing budget).
- They will be used to select the marketing strategy and develop a marketing plan.
- Must be SMART.
- Need to be consistent with and support corporate objectives.
Name the main marketing objectives
- Sales volume and sales value
- Market and sales growth
- Market share
- Market size
- Brand loyalty
Define sales volume
The number of units sold.
Define sales value
How much the sales are worth (in £)
Define market share
The proportion of a particular market that is controlled by an individual business.
Define market growth
Measures the change in size in a market as a %.
Explain sales volume as a marketing objective
Targeting to achieve a specified number of units sold or customers.
Explain sales value as a marketing objective
Targeting to achieve a specific revenue from sales.
Explain market and sales growth as a marketing objective
Targeting an increase in overall sales in order to either maintain market share (in a growing market) or improve it.
Explain market share as a marketing objective
Targeting an increase in the business’ own sales as a percentage of the total market. Increasing market share is likely to bring benefits for a business such as brand loyalty and greater revenue.
Explain market size as a marketing objective
In itself this is difficult to use as an objective, but a knowledge of market size will give an indication of the potential market. This would enable realistic targets to be set for sales, growth and share.
- It determines the potential number of customers.
- Usually measured in terms of both volume (units) and value (sales)
- Size of individual segments within the overall market can be measured.
Explain brand loyalty as a marketing objective
Targeting an increase in repeat purchases: customers coming back time after time or consistently buying the brand.
What are the values of setting marketing objectives?
- Ensures functional activities stay consistent with corporate objectives.
- Provide a focus for marketing decision-making and effort, giving a sense of direction.
- Provide incentives for marketing team and a measure of success/failure, which can be motivating.
- Establish priorities for marketing resources and effort.
- Allows for evaluation of performance.
How do marketing objectives enable evaluation of performance?
As with all objectives, they need to be SMART: specific, measurable, achievable, realistic, time based. All of the marketing objectives outlined are quantifiable and therefore measurable.
- As a result, they can be used to judge performance.
What are the potential problems with setting marketing objectives?
Fast-changing external environment
- E.g. changes in legislation impacting the whole market.
- E.g. new competitor enters the market.
Potential conflict between marketing objectives
- E.g. trying to increase market share by cutting prices may damage objectives for brand perception.
Easy to be too ambitious with marketing objectives
- E.g. growing market share without putting necessary resources in place to achieve it.
How to calculate market share
Sales revenue of a business / total market sales revenue x 100
E.g. if a business has a revenue of £3m in a market with total sales of £15m, its market share is: 3 / 15 x 100 = +20%
How to calculate sales growth
Difference in sales / earliest year x 100
E.g. if a business’ revenue was £500,000 in 2016 and £650,000 in 2017, the sales growth is: 150,000 / 500,000 x 100 = +30%
How to calculate market growth
Difference in size / earliest year x 100
E.g. if a market has grown from 2m units in 2016 to 2.5m in 2017 the growth is: 0,5 / 2 x 100 = 25%
How to calculate market size
(sales / market share) x 100
E.g. if a business has sales of £3m and a market share of 5% the market size is: £60m
or
- number of customers
- sales volume minus number of units sold
What is relationship marketing?
Relationship marketing is 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.
Internal influences on marketing objectives and decisions
- Finance: the marketing function needs to operate within the budget allocated.
- Production capacity: it must be physically possible to achieve growth targets.
- Human resources: market growth may be dependent on the skills and knowledge of the workforce and the availability of labour.
- Nature of product: innovative products have more scope for growth and development than staples such as bread and fuel.
- Investment needed
- Planned growth
External influences on marketing objectives and decisions
- Market and competition: objectives will vary according to the state of the market and the actions of competitors.
- Economic factors: factors such as the economic cycle and interest rates affect consumer spending.
- Ethics: consumers have become more aware of environmental issues, e.g. the amount of packaging.
- Technology: this affects the way businesses both produce and sell goods, e.g. mass customisation and online sales.
- Changing trends in society
How can a business identify and satisfy customers’ needs?
In order to be able to satisfy customers’ needs, businesses need to first identify and understand them. This is achieved through conducting market research.
Define market research and what can it involve?
Involves the systematic collection of data about the market and the customer to inform decision-making. This may involve:
- study of market trends and characteristics
- analysis of market shares and potential of existing products
- sales forecasting for products
- analysis and forecasting of sales of new products
What are the different roles of market research?
- Competitor analysis
- Customer feedback
- Ideas for new product development
- Identify trends in the market
- Aid pricing strategies
- Meeting consumer needs
What are the two main methods of market research?
- Primary research
- Secondary research
What is primary research?
Also known as ‘field research’, it involves the collection of information for the first time directly by or for a business to answer specific issues or questions. It is data that has not been gathered before.
Give examples of primary research
- Surveys/polls: conducting questionnaires face to face, by post, by telephones or online.
- Observation: watching people, observing reactions to displays or counting footfall.
- Focus groups: using small groups of people to determine consumer attitudes and opinions.
- Test marketing: trying out products on a small group prior to a full-scale launch.
What is secondary research?
The second-hand research involving the collection of data that already exists and has been produced by somebody else.
Give examples of secondary research
- Published reports: these might be reports published by trade associations and journals, which may contain valuable information on markets and trends.
- Government and other agencies: a great deal of information is available from various agencies. A key publication is the Annual Abstract of Statistics.
- Online research: a great deal of information regarding markets and consumer behaviour is also widely available through the internet.
Explain observation as a method of market research
- Watching how consumers behave provides many insights, but can leave questions unanswered.
- Observations work well in retail markets: sit outside a shop and watch how many people walk by, look at the window display, etc.
Explain postal surveys as a method of market research
- Sent to the address of potential customers who complete the form and send it back in a pre-paid envelope.
- Relatively cheap, a postal survey can cover a wide geographical area and avoids the potential for interviewer bias.
- However, response rates (the proportion of people sending back a completed survey) are often very low and it can take a long time before enough surveys are returned.
Explain telephone as a method of market research
- Not to be confused with “telesales” (which is a method of selling), the telephone interview allows quicker feedback than a postal survey.
- However, potential customers are often wary of being called and may be reluctant to give anything other than short answers.
Explain online surveys as a method of market research
- Increasingly popular and relatively low cost, online surveys are widely used by small businesses as a way of capturing the views of existing and potential customers.
Explain face-to-face surveys as a method of market research
- Personal interviews conducted face-to-face.
- A costly, but a good way to get detailed insights from an indiviual.
Explain focus groups as a method of market research
- Groups of potential customers are brought together to discuss their feelings about a product or market.
- Focus groups are a good way of getting detailed information about customer tastes and preferences.
Explain test marketing as a method of market research
- Involves selling a new product in a small section of the market in order to assess customer reaction.
- E.g. a start-up could start by selling to a limited local area in order to iron-out product issues.
- Software firms often test-market their products by offering “beta” versions for testing by a small group of potential customers.
- Can be a good predictor of how a new product or service will be received by the larger market (provided that it can be kept secret from competitors).
Advantages and disadvantages of primary research
ADVANTAGES:
- Specific to the business/product (more relevant)
- Up to date
DISADVANTAGES:
- Expensive and time-consuming
- Sample may be too small
- Poor validity of research (may be biased)
Advantages and disadvantages of secondary research
ADVANTAGES:
- Can be cheaper
- Immediately available
- Looks at the whole market
DISADVANTAGES:
- Not specific to the business/product
- Can be out of date
- Accessible to competitors
What are the two types of data that can be collected?
- Quantitative data: factual information (numerical, objective data) “hard data” as it is measurable
- Qualitative data: attitudes, views and opinions (subjective data) “soft data as it is often personal
What is qualitative market research?
The aim of qualitative market research is to find out about the attitudes and opinions of consumers. It is collected from small groups of consumers such as focus groups. It can reveal consumer reactions to:
- products
- pricing
- packaging
- branding
This might enable a business to design products that are more appealing to consumers.
What is quantitative market research?
The collection of information on consumer views that can be analysed statistically. It can be represented in easy-to-read charts and graphs showing:
- sales and potential sales
- the size of the market
- the prices consumers are prepared to pay.
Advantages and disadvantages of qualitative data
