Unit 3- Decision making to improve marketing performance Flashcards
What are the 6 common marketing objectives?
Sales volume, Sales value, Sales growth, market share, market size and brand loyalty.
Value of setting marketing objectives
Enables the business to achieve overall objectives, can motivate staff, they can be used to measure performance
External influences on marketing objectives
-Planned growth
-Investments needed
-Finance available to business
-Development of product
Internal influences on marketing objectives
-PESTLE
What is market research?
the process of gathering data on potential customers. In order to satisfy customers, a business needs to first identify and understand customers.
What is primary research?
Data gathered by you
What is secondary data?
Data gathered by someone else
What are some research methods?
Observation, questionnaires, postal surveys, telephone interviews, online surveys, face to face surveys, focus groups, test marketing
What are the advantages of primary research?
Specific to your business or product.
Up to date data
What are the negatives of primary research?
Expensive and time consuming
Poor validity of research
What are the positives of secondary research?
Can be cheaper
Looks at the market as a whole
What are the negatives to secondary research?
Can be out of date
Accessible by competitors
What can market mapping help a business do?
Market mapping can help a business identify the position of its products in relation to others. Two key features are used, price and quality. After market mapping potential gaps in the market can be found.
What are some sampling methods?
random sampling, Quota sampling, Stratified random sampling.
Benefits of sampling
Reduces costs
If the right people are surveyed, should be representative of target population
Drawbacks of samplings
Samples may be unrepresentative
The data collected may be inaccurate
What is a confidence level?
An indication of how accurate the research findings are
What is a confidence interval?
The possible range of outcomes from a given confidence. As the interval narrows the confidence level will fall.
What is the use of correlation?
Correlation can help the business understand the relationship between two factors. If a business can understand the key factors affecting its business it can manipulate these factors to benefit the business.
What is extrapolation?
Using past data to extend an identified trend in the future. Can be useful when trends can be clearly identified and market is stable.
What is PED?
Price elasticity of demand is wether the change in price will trigger a change in the level of demand.
What is the calculation for PED?
% Change in quantity demanded / % Change in price
When is a product elastic? (PED)
If the PED figure is below -1, this means that the % change in demand will be greater than the % change in the price, the demand is elastic.
When is the product inelastic? (PED)
If the PED figure is between 0 and 01, this means that the % change in demand is less than the % change in the price. The demand is inelastic.
What happens if the price increases on an elastic product?
It will lead to a bigger % decrease in demand so the revenue will fall.
What happens if the price decreases on an elastic product?
It will lead to a bigger % increase in demand so the revenue will rise.
What happens if the price increases on an inelastic product?
It will lead to a smaller % decrease in demand so the revenue will rise
What happens if the price decreases on an inelastic product?
It will lead to a smaller % increase in demand so the revenue will fall.
Factors influencing elasticity of demand?
-Strength of a brand
-Whether item is a necessity
-Whether there are substitutes
-Similar products
What is YED?
Income elasticity measures how sensitive quantity demanded is to change in income, does demand change by a bigger proportion or a smaller proportion than the change in price.
What is the calculation for YED?
% change in quantity demanded / % change in income
When is a product elastic? (YED)
If the YED figure is below -1, this means that the % change in demand will be greater than the % change in the income, the demand is elastic. If the YED figure is above +1, this means that the % change in demand will be greater than the % change in the income, the demand is elastic?
When is a product inelastic? (YED)
If the YED figure is between 0 and -1, this means that the % change in demand is less than the % change in income, the demand is inelastic.
When does the change in demand depend on the type of product?
If the YED is 0 / below 0 then it is an inferior good. If it is between 0 and +1 then it is a normal good. If it is between +1 and above +1.
What happens if the income increases on an elastic product when YED is -1?
The demand of the inferior good will fall and revenue will fall too.
What happens if the income decreases on an elastic product when YED is -1?
The demand of the inferior goods will increase and revenue will fall too.
What happens if the income increases and decreases on an inelastic product, when the YED is -1 / +1?
The change in demand for normal/inferior goods will be small and so there will be only be a small change in the revenue
What happens if the income increases on an elastic product when the YED is +1?
The demand of the luxury goods will increase and the revenue will increase too
What happens if the income decreases on an elastic product when the YED is +1?
The demand of luxury goods will decrease and the revenue will decrease too
What is market segmentation?
Market segmentation is the process of splitting the market into subgroups if consumers with similar characteristics.
(e.g demographic, geographic, behavioural, income)
What is demographic segmentation?
- Identifies subgroups of the population based on social and economic profile or characteristic of individuals or households
-This includes factors such as age, gender, level of education, race and religion
What is geographic segmentation?
- Identifies subgroups of the population based on where people live
- People in different geographical areas display different characteristics and needs
What is behavioural segmentation?
- Identifies subgroups of population based on the behavioural patterns of the consumer rather than their characteristics. (e.g reasons for making purchases, frequency of purchases, time of purchase and brand loyalty)
What is income segmentation?
- Identifies subgroups of the population based on their levels of income and profession or socio-economic group
-Socio-economic groups:
-A (top management)
-B (middle management)
-C1 (Junior management)
-C2 ( skilled manual)
-D ( Semi-skilled)
-E (Casual worker, unemployed and pensioners)
What are the benefits of market segmentation?
-Develops consumer insight
- Improves engagement and brand loyalty
-Streamlines mass customisation
- Helps with designing a product
what are the drawbacks of market segmentation?
- Limited access to market expertise
- Individuality
-Keep market segments up to date - Promotion problems
What is targeting?
Targeting is the process whereby, after segmenting a market, a business will choose who to aim its products at (target market)
What is niche marketing?
Targeting a small section of the market
benefits of niche marketing?
- Less competition
- Brand loyalty
- Less spends on marketing
drawbacks of niche marketing?
- Limited growth
- New competitors
- Higher ROI not guaranteed
- High competition
What is mass marketing?
Targeting the entire market by 1 generic product or 1 product adapted to each segment.
benefits of mass marketing?
- Cost efficient
- Wider audience
- Brand awareness
drawbacks of mass marketing?
- Customer experience
- Competition
- Inefficient for small business
What is positioning?
Businesses might use a market map to help them position their business within the market. Positioning involves a business considering the combination of benefits and price relative to competitors
What are the 7P’s?
- Product
- Price
- Place
- Promotion
- People
- Process
- Physical environment
Types of products?
Consumer products ( Product bought by the final customers for personal use or consumption)
Industrial products (Product bought by the other business for further processing or to be used in the business activity)
Types of consumer products?
convenience products (Product widely available, frequently bought or bought on impulse, no planning, low customer involvement)
shopping products (Customers will shop around, compare product features and prices, some planning and customer involvement, brand and price are important in the purchasing decision)
Specialty product (Customer take a long time to process information and make a decision, customers are willing to travel far to check the product, high level of customer involvement, staff involved in the purchases are important)
What is the product development process?
-Idea
-Prototypes
-Modifications
-Develop
-Launch
What is the product life cycle?
Graph that tracks sales of each individual product over time.
What are the stages in the product life cycle?
-R&D
- Introduction
- Growth
- Maturity
- Decline
Pros of product life cycle?
- Tracks sales
- Prompts extension strategies
Cons of product life cycle?
- Each product has its own cycle
- Not always clear where a product is
What are the different product extension strategies?
- Advertisement
- Reducing the price
- Adding value
- Entering new markets
- Changing the packaging
What is the advertisement extension strategy and the drawbacks of it?
-Promotes product
-May cost a lot of money
What is the reducing the price extension strategy and the drawbacks of it?
- Reduces the price
- You lose out on some profit
What is the adding value extension strategy and the drawbacks of it?
Adding benefit
Costs a lot
What is the entering new markets extension strategy and the drawbacks of it?
- You can segment
- Market might not be profitable
What is the changing the packaging extension strategy and the drawbacks of it?
- Redesign your product
- Might be unattractive to customers
What is the Boston Matrix?
The Boston Matrix allows businesses to plot their products on a grid or matrix according to each product’s market share and its market growth.
What are the 4 categories of products?
Dog: Low market share and low market value
Question marks: Low market share and high market growth
Stars: high market share and high market growth
Cash cows: high market share and low market growth
What does the matrix suggest to do for each category?
Dog: Remove this product from the market
?: Monitor this product to see whether it has the potential to become a star
Star: Invest in this product as it has potential for further growth.
Cash cow: Maintain this profitable product’s market share but do not spend too much on it as sales are unlikely to grow significantly
Benefits of the Boston Matrix?
- Simple to implement and easy to understand
- It can predict the future actions of a company
Drawbacks of the Boston Matrix?
- The true nature of businesses may not be reflected
- The distinction between high and low is subjective
What are the influences on pricing decisions?
-Costs
- Competitors prices
- Disposable income
- Fashion
- PED
- Stage of product life cycle
What are the different pricing strategies?
-Cost-Plus
-Price skimming
-Price penetration
-Dynamic
What is cost plus pricing?
The price is determined by adding a % markup to the cost of producing a product.
What is price skimming?
Setting a high initial price for a new product to recoup high development costs
What is price penetration?
Setting a low initial price for a product in order to get a foothold in the market and gain market share
What is dynamic pricing?
When the price changes quickly in responses to the ability to supply or to changing levels of demands
What are the different types of distribution channel that exist?
Direct
Traditional
Modern
What is Direct distribution channel?
This is when a product Is disrupted from the producer straight to the consumer
What is the Traditional distribution channel
This is when the product goes from the producer to the wholesaler to the retailer and then to the consumer
What is the Modern distribution channel
This is when the product goes from producer to retailer to consumer
What are the pros of Direct distribution channels?
-Faster delivery
-Focus on quality
-Complete control over supply chain
What are the cons of direct distribution channels?
-Might be too much to focus on
-Increased upfront cost
-Increased workload
What are the pros of the modern distribution channel?
-makes it easier for producers to distribute their products
-makes it more convenient for consumers to buy those products
What are the cons of the modern distribution channel?
-poor customer service could limit sales
-cause higher prices for the end consumer, as the intermediary must make a profit
What are the pros of the traditional distribution channel?
- Share shipping and storage cost
-avoids complexity of managing distribution logistics
What are the cons of the tradition distribution channel?
-increasing the amount of time it takes for your product to reach the buyer.
-harder to establish brand loyalty when you are not interacting directly with your customers.
What is multichannel distribution?
Distributing your products in different ways (e.g like apple, online, in store and through other retailers)
What are the factors affecting distribution?
-Cost
-Control over promotion and pricing
-geographical location
-Customer expectation
-The type of product
What are the pros on e-commerce?
-Low costs
-Open 24/7
-Access to wider market
What are the cons on e-commerce?
-Products being returned
-Hard to get recognition
-Lots and lots of competition
What are the pros of m-commerce?
Doesn’t require a pc
- allows to make purchases on the go
What are the cons of m-commerce?
-Misses out customers who do not use a device
-Requires to set up an app
What is promotion?
Promotion is the key method a business will use to create awareness, understanding and a desire for the product or service.
What are the different types of promotion methods?
-AD
-PR
-Sales Promo
-Packaging
-Exhibition
-Branding
-Personal selling
-Merch
What is the AD promotion methods?
This is a form of non-personal communications using mass media to change the attitudes and buying behaviours of customers. It can be informative or persuasive
What is the PR promotion method?
This is in store promotional activity by manufactures or retailers at the point of sale
What is the sales promo promotion method?
Form of price discounts (e.g BOGOF, coupons, vouchers, special offers
What is the packaging promotion method?
This emphasises the attractiveness of the product and informs the customer of its features, functions and contents
What is the exhibition promotion method?
These are events staged to attract all those people involved in a particular market, both sellers and buyers
What is the branding promotion method?
This establishes an identity for a product that distinguishes it from the competition.
What is the personal selling promotion method?
This form of promotion involves visits by a business’ sales representative to prospective customers.
What is the merch promotion method?
This is promoting the business’ image to establish a favourable public attitude towards a company
Influences on the promotional mix?
-target audience
-type of product
-product portion in the product life cycle
-business budget for promotion
-competitors own promotion methods
-technology
What is the importance of branding?
- Adds value
-Makes product recognisable and produces a USP
-Makes product desirable and allows a business to charge a premium price
-Provides a competitive advantage
-Creates brand loyalty
-Builds trust and enables brand extension
-Reduces PED
-Less money spent on branding
-Can represent an intangible asset
What is the importance of people or provision of customer service?
Customers are likely to be loyal to orgs that serve them well from the way in which they are interacted with them.
What is the importance of processes?
Associated with customer services are a number of processes involved in making marketing effective in an organisation. (e.g processes for handling customer complaints, process for identifying customer needs and requirements, etc)
What is the importance of physical environment?
Todays customers expect a high level of presentation in modern shops, customers need to find their way around the store easily and often expect a good standard or presentation. Physical environments and its importance is different for all services.
Factors affecting the marketing mix
- Marketing objective
-The Boston Matrix
-Type of product
-Position of the PLC - The target market
-Competition
-Positioning
