Unit 3 Definitions - Marketing Flashcards
Boston Matrix
a method of analyzing brands in a firm’s product portfolio in terms of market share and market growth. Brans are classified as cash cows, dogs, problem children and stars
Brand
the name of a particular product (or company) which conjures up a positive image that differentiates the product from other similar products in the mind of the consumer e.g Levi Jeans are the original and toughest. Branding means developing certain reputations in consumers’ minds
brand family
a range of similar products all selling under the same product brand name e.g Kit Kat, Orange Kit Kat, chunky Kit Kat
brand loyalty
customer value tends to repeat purchase of a specific company’s product, which is likely to make demand price inelastic
business to business marketing
a firm targets its sales on other firms. E.g management consultancy firm
business to consumer marketing
firms target their sales to households e.g Tesco sells to local residents
cash cow
a brand that has a high market share in a mature market that is not growing fast e.g Nescafe
Confidence intervals
the range of values that are likely given a set confidence level. E.g a business may be 95% confident that sales will be between £50,00 and £70,000
confidence levels
the probability that the research findings are correct. This is expressed as a per cent e.g 99% confidence that the findings are accurate
consumer good
goods bought for consumption by the general public
convenience good
these are widely available mass-market standard products that are purchased regularly, often cheap and habitually bought. They may be impulse purchases as they are affordable and customers know all about them e.g crisps, biros
correlation
is a statistical technique used to establish the strength of a relationship between two sets of values? E.g the sales of ice cream may tend to rise as the temperature rises i.e. positive correlation
customisation
involves producing a unique good to cater for one individual’s requirements e.g a tailored suit
demographic market segmentation
markets or customers are targeted on the basis of their age, gender or family makeup
digital marketing
involves anticipating and satisfying consumer wants using technology; specifically social media, use of search engine marketing and digital display adverts
direct selling
offering for sale communication with the consumer offering a sale via letter, email or telephone. Junk mail is often direct selling
distribution channels
ways of getting the products to where the customer can buy them. E.g selling directly on the internet or selling to a shop or via a wholesaler
dog
goods that have a low market share of a mature market that is not growing fact e.g Duncan’s chocolate
e-commerce
is the buying and selling of goods and services through the use of electronic media i.e methods that use power such as the Internet, phones, tablets etc.
elastic
responsive. Usually in this context that a change in price will cause a greater percentage change in quantity. In this case, a drop in price will raise revenue and a rise in price cuts revenue. Demand is price elastic when there are many alternative products.
extension strategy
attempts to raise sales when products are reaching the of their product like cycle and have been declining e.g via repackaging or modification
what are the five stages of the product life cycle
development, introduction, growth, maturity and decline
extrapolation
involves using previous patterns of numerical data to estimate future values
income elasticity of demand
measures the responsiveness to consumer demands to change income. It shows whether goods are normal or inferior.
what is the equation for income elasticity of demand
% change in quantity demanded / % change in income
what does the income elasticity number mean
if the income elasticity of demand is positive then goods are normal, if negative they are inferior
industrial good
are goods bought for use in business processes
inelastic
unresponsive. Usually in this context that a change in price will cause a smaller percentage change in quantity. In this case, a drop in price will cut revenue and a rise in price raise revenue. Demand is price inelastic when there are few alternative products.
inferior good
a product for which demand falls as income rises. It is often of lower quality than its competitors e.g Tesco values orange juice
informative advertising
paid for communication that gives factual information about the product and increases awareness of its existence.
innovation
introduction of new ideas in business. Product innovation means launching an item never seen before. Process innovation means a novel method of production has been initiated e.g DVDs.
loss leader
a product sold below cost with the intention of generating other profitable sales e.g a supermarket advertises beans at 3 per can hoping that customers will buy other full-priced items
market growth
the percentage change in the volume or value of sales of all the brands in the product category
market mapping
using a graph to plot exiting products in terms of various criteria. It can identify various market segments and gaps in the market
market positioning
refers to the sector of the market the firm is targeting e.g. up-market or down market; trendy or traditional, etc.
market segmentation
involves dividing the market up into groups of potential customers, each with different characteristics. If the good can be tailored to the specific demands of a group of people their valuation of it will be higher than the standard version, hence they are likely to buy the new product.
market share
the percentage of total market sales accounted for by one firm
the equation for market share
one firm’s sales of a specific product / total market sales of the specific product x 100
market size
the volume or value of sales of a product type e.g. the number of caravans sold or value of caravans sold in a year
market skimming
selling at a high price, but low level of sales targeting richer consumers. Profit is made by achieving high-profit margin
marketing
management process of identifying, anticipation and satisfying consumer requirements profitably. Marketing means giving consumers what they want
marketing decision making
the use of research and intuition to determine the marketing mix and strategy of the business
marketing mix
how the main elements of the firm’s marketing strategy are combined
what are the 7 Ps
price, product, promotion, placement, process, people and physical environment
marketing objectives
any aim that focuses on satisfying the consumer and boosting sales. E.g high sales volume and value, market share, brand loyalty, market growth.
marketing plan
a set of proposed marketing actions to be undertaken at specified times with the aim of helping the business achieve its marketing objectives. A marketing plan should enable the firm to gain a competitive advantage and deliver a USP and how this benefits specific groups of consumers.
mass marketing
produces a standard product, designed to appeal to a large section of the population e.g sellotape
merchandising
ensuring the products are displayed in an attractive and prominent manner. This ensures a point-of-sale advertisement
multichannel distribution
describes the case where businesses use more than one channel of distribution e.g internet and shops
negative correlation
occurs when an increase in the value of x is associated with a decrease in the value of y (or vice versa). A perfectly negative correlation will have a value of -1
new product development
a firm identifies, develops and markets a novel or improved good or service
niche marketing
target a small specialised part of the overall market e.g left-handed golf club for left-handed people
normal good
a product for which demand rises as income increases e.g theatre visits
penetration pricing
setting at a low price to try to gain a high market share and brand recognition. This is likely to be a short run tactic.
people MARKETING MIX
the sales personnel or service providers for the product and the impression they give
persuasive advertising
paid for communication that tries to convince consumers to buy the product through emotion and image rather than facts.
physical environment MM
the state of the premises where the product is sold - how clean or stylish
positive correlation
means that as x increases in value, the value of y also tends to increase. In these cases, the value of the correlation coefficient will be positive. Perfectly positively correlated variables have a value of +1
predatory pricing
the anti-competitive practice of setting prices low enough to drive weaker competitors out of the business e.g Rentokil has done this.
PED
a measure of the extent to which demand for a good reacts to a change in price
equation for PED
% change in quantity demanded / % change in price
price leader
a brand that is in such a powerful position in the market that it can heavily influence the selling price. other firms many set their prices in a similar range
price skimming
charging a high price to gain a high-profit margin although limiting sales to a high-income consumers
pricing strategy
long term goal regarding pricing e.g John Lewis “Never knowingly undersold” was a longstanding commitment
pricing tactic
temporary approach to pricing designed to deal with a short term threat or opportunity e.g predatory pricing until the rival firm fails
primary market research
the collection of information first-hand. This data did not previously exist and is collected by field research
problem child
goods or services with a low market share of a fast-growing market. E.g Alta Vista search engine
Process MM
the practical aspects involved in buying the product e.g booking regime or direction given on a website
product development
marketing new or modified products to existing customers
product life cycle
the phases that most products go through are measured by sales
product portfolio
the range of products that a firm produces e.g Heinz 57 varieties
product portfolio analysis
the study of a range of products with a view to deciding whether new products should be added to the range or old ones discontinued. It utilizes the product life cycle and the Boston Matrix
promotion
attempts to gain sales by drawing attention to a firm or its products e.g branding
promotional mix
co-ordination of different methods of promotion such as branding and public relations to achieve marketing targets
psychological pricing
a pricing tactic charging just below a round figure to give the impression. of value for many e.g charging £4.99 instead of £5
public relations
obtaining free favourable publicity via reports in independent media e.g TV
qualitative analysis
examines non-numerical data to draw conclusions about a market. It can be subjective and open to opinion e.g examining the quality of a rival’s management or new product
qualitative research
in dept investigations into reasons for consumer attitudes or behaviour
quantitative analysis
examines statistical data to draw conclusions about the market. This is objective and quantifiable. e.g. how much did the market growth last year
qunaittative research
research using pre-set questions given to a large enough sample of people to provide statistically valid data
repeat sales
when customers stay loyal to the brand and buy it again
sales forecasting
a prediction of the level of sales revenue for individual products or the whole organisation
sales value
the revenue gained from sales of a product, price x quantity
sales volume
the quantity of an item sold
sampling
choosing a representative group to survey out of the whole population to find out the characteristics of the whole population
secondary market research
the use of information that has already been collected. This second-hand data is collected by desk research
shopping product
these items are purchased fairly often and typically reasonably expensive. Consumers are likely to spend some time gaining information about the product, comparing models and brands as they are not totally familiar with the item e.g washing machine, haircuts or furniture
speciality product
often have unique characteristics perhaps niche market products that are rarely bought e.g designer clothes, luxury cruises, wigs
star
high market share in a fast-growing market e.g google search engine
strongly correlated data
one variable is closely linked to another so a change in one is connected to a change in the other
target market
the type of customer that a firm’s product or service is aimed at e.g organic vegetables at the green consumers
test market
is the introduction of a product to a certain geographical area. in order to assess its likely success, or evaluate the effectiveness of marketing methods
trend
the underlying pattern of change with a set of data
wholesalers
organisations that buy large quantities from suppliers and sell on in smaller volumes. This can reduce delivery times and avoid the need to hold so much stock
word of mouth connection
favourable endorsement of your brand by customers to another customer. This is free advertising and often effective but hard to achieve
