Unit 3 Flashcards
What does marketing involve?
Identifying and understanding customer needs and wants.
Businesses can then provide products and services that meets these needs profitably. It is about understanding customers, not just selling.
Why do businesses bother marketing?
To reduce risk of product failure
Understand their customers
Communicate their products in a way which encourages customers to buy them
Keep up to date with market trends in order to meet customer needs
What’s the marketing process?
Market research undertaken to understand customers
Develop and test products and services
Communicate products and services to customers
What’s a market segment?
A group of customers in a market that have similar characteristics and needs.
E.g. You can segment the car market by the type of car a person drives e.g. Sports, people carrier etc and suit their needs.
What are the benefits of market segmentation?
It helps carry out market research
You can tailor products to customer needs
Promotions can be targeted at specific groups
What’s market research?
Gathering information about customers, competitors and market trends by collecting primary and secondary data.
This helps the business make decisions.
When reading a case study on market research, what must you consider?
Was the right type of research used?
How accurate is the research?
Is the research representative of the target market?
Is there any information the market research doesn’t show.
What are examples of qualitative market research?
Interviews
Consumer panels
Questionnaires and surveys
Focus groups
What’s a product trial?
When consumers buy a product for the first time to assess whether or not they want to buy it again.
If product trial is successful, it could lead to repeat purchases and customer loyalty where customers will buy a product more than once and keep coming back.
What increases product trial?
Low trial prices Advertising Public relations Free samples Viral marketing Reminder adverts Promotions Product innovations Loyalty schemes e.g. Cards
What’s the product life cycle?
A model showing the general sales of a product over time.
1) Introduction - product is launched
2) Growth - if launch is successful, sales increase sharply and profit is made
3) Maturity - sale growth slows but repeat customers continue and loyalty builds
4) Decline - the product eventually becomes outdated and sales fall
5) Extension strategies - adaptions/new products extend the life cycle and sales
What is a product portfolio?
The range of products or services a business sells.
How does a product portfolio help a business?
It helps make decisions regarding:
- What products to launch and when
- When to withdraw a product
- What products are doing well or badly now and in the future
- How to increase sales
What is the cash flow of the different stages of the product life cycle?
Introduction - negative (more money out than in)
Growth - positive but small
Maturity - positive
Decline - experience issues/fall in cash flow
What’s the Boston Matrix?
A product portfolio analysis tool used to plan development of products (which can be linked to the life cycle).
Problem child: should the business invest or divest?
Star: very successful but growth needs to be funded for demand and cash flow may be a problem.
Cash cow: little growth but is established and can support others
Dog: few prospects. Is it profitable?
What are the segments of the Boston Matrix?
Problem child / question: low market share, high market growth
Star: high market share, high market growth
Cash cow: high market share, low market growth
Dog: low market share, low market growth (these are often used to fund or be funded by other products. It may also be kept in case the product becomes more fashionable)
What’s a brand?
A named product, logo, symbol or design consumers can identify, differentiate and associate with.
What are the benefits of branding?
Consumers are more willing to trial products in the brand range.
Brands encourage customer loyalty.
Consumers trust brands, leading to repeat purchases.
Brands can often charge premium pricing.
Consumers have a greater awareness of brands.
Brands can lead to increased sales and market share.
There is very little difference between non-branded products, meaning there’s nothing to differentiate it by.
What’s market mapping?
Showing the difference between brands, products or businesses based on two variables.
What’s product differentiation?
How does it help?
Making the product different from others which helps:
Position their products and target different market segments
Gain an advantage over rivals
Consumers to see their needs are being met by one product rather than another
How can a product be differentiated?
Unique and catchy name Quality Design, formulation or function Packaging Customer service Marketing (product, price, place, promotion)
What’s the marketing mix?
A combination of factors which helps a business to take customer needs into account. This includes considering the 4 P's: Product Price Place Promotion
What does product (of the marketing mix) mean?
The product must meet the needs of the customer and must consider…
Who it's aimed at The range Unique selling point Brand Packaging
…when differentiating their product
What does price (of the marketing mix) mean?
What the business will charge consumers
This is important as it indicates the quality
Changes in price can influence demand
Branded products tend to have a higher price