Unit 3: Marketing Flashcards
What is the definition of marketing objectives?
The goals set for the marketing department to help the business achieve its overall objectives. These must meet the SMART criteria
What is the definition of marketing strategy?
Long term plan established for achieving marketing objectives
What is the definition of market orientation?
An outward looking approach basing product decisions on consumer demand, as established by market research
What is the definition of product orientation?
An inward looking approach that focuses on making products that can be made (or have been made for a long time) and then trying to sell them
What is the definition of asset-led marketing?
An approach to marketing that bases strategy on the firm’s existing strengths and assets instead of purely on what the customer wants
What is the definition of societal marketing?
This approach considers not only the demands of consumers but also the effects on all members of the public (society) involved in some way when firms meet these demands
What is the definition of demand?
The quantity of a product that consumers are willing and able to buy at a given price in a time period
What is the definition of supply?
The quantity of a product that firms are prepared to supply at a given price in a time period
What is the definition of equilibrium price?
The market price that equates supply and demand for a product
What is the definition of market size?
The total level of sales of all produces within a market
What is the definition of market growth?
The percentage change in the total size of a market (volume or value) over a period of time
What is the definition of market share?
The percentage of sales in the total market sold by one business:
Firm’s sales in time period ÷ total market sales in time period x 100
What is the definition of direct competitor?
Businesses that provide the same or very similar goods or services
What is the definition of unique selling point (USP)?
The special feature of a product that differentiates it from competitors’ products
What is definition of product differentiation?
Making a product distinctive so that it stands out from competitors’ products in the eyes of consumers
What is the definition of niche marketing?
Identifying and exploiting a small segment of a larger market by developing products to suit it
What is the definition of mass marketing?
Selling the same products to the whole market in which consumers have similar characteristics
What is the definition of market segmentation?
Identifying different segments within a market and targeting different products or services to them
What is the definition of consumer profile?
A quantified picture of consumers of a firm’s products, showing proportions of age groups, income levels, location, gender and social class
What is the definition of marketing?
The process of identifying, anticipating (predicting) and satisfying customer needs profitably
What is the definition of a market?
A group of customers that is interested in a product, has the resources to purchase the product and is permitted by law to purchase it
What is the relationship between price, supply and demand?
Increase in supply = decrease in price, increase in demand
Decrease in supply = increase in price, decrease in demand
Increase in demand = decrease in supply, increase in price
Decrease in demand = increase in supply, decrease in price
What are consumer products?
- Convenience items (newspapers and milk)
- Shopping items (clothes)
- Luxury products (Rolex watch)
What are industrial products?
These are capital goods and finished goods traded from business to business ready for retail to the final consumer. These goods do not fall into the same categorisation of consumer goods
What are the advantages of niche marketing?
- Less competition
- Clear focus (target particular customers)
- Builds up specialist skills and knowledge = market expertise
- Can often charge a higher price (customers are willing to pay more)
- Profit margins thus often higher
- Customers tend to be more loyal
What are the disadvantages of niche marketing?
- Lack of economies of scale
- Risk of over dependence on a single product or market
- Likely to attract competition if successful
- Vulnerable to market changes (all eggs in one basket)
What are the advantages of mass marketing?
- Benefits of economies of scale
- Wider market = greater likelihood of sales
- Customer wants and needs are more general
What are the disadvantages of mass marketing?
- Lower profit margins, more output required to make up for lower prices
- Higher level of competition from other businesses in the market
- Customers are less loyal
What is market segmentation?
Market segmentation splits up a market into different types (segments) to enable a business to better target its products to the relevant customers.
It is based off geographic, demographic, behavioural and psychographic factors
What are the advantages of market segmentation?
- Products can be more specifically designed for that target segment of the market. More value to those customers = increased sales
- Identifies gaps in the market that are not currently being targeted and allows a company to target those customer groups
- Marketing strategies can be focused. Less wastage of money on customers who are unlikely to buy the product
- Allows for price discrimination
What is price discrimination?
Price discrimination is a pricing strategy that charges customers different prices for the same product or service e.g. age discounts, different class seating on an airline
What are the limitations of market segmentation?
- R&D, promotional costs, inventory holding costs and production costs might be high as a result of trying to sell several different specific goods to each different segment
- Excessive specialisation into certain markets could lead to problems if consumer tastes suddenly change - risk of a lack of adaptability
- Extensive market research is needed which can be time consuming and costly
What is the definition of market research?
The process of collecting, recording and analysing data about customers, competitors and the market
What is the definition of primary research?
The collection of first-hand data that is directly related to a firm’s needs
What is the definition of secondary research?
The collection of data from second-hand sources
What is the definition of qualitative research?
Research into the in-depth motivations behind consumer buying behaviour or opinions
What is the definition of quantitative research?
Research that leads to numerical results that can be statistically analysed
What is the definition of focus groups?
A group of people who are asked about their attitude towards a product, service, advertisement or new style of packaging
What is the definition of a sample?
The group of people taking part in a market research survey selected to be representative of the overall target market
What is the definition of random sampling?
Every member of the target population has an equal chance of being selected
What is the definition of systematic sampling?
Every nth item in the target population is selected
What is the definition of stratified sampling?
This draws a sample from a specified sub-group or segment of the population and uses random sampling to select an appropriate number from each stratum
What is the definition of quota sampling?
When the population has been stratified and the interviewer selects an appropriate number of respondents from each stratum
What is the definition of cluster sampling?
Using one or a number of specific groups to draw samples from and not selecting from the whole population e.g. using one town or region
What is the definition of open questions?
Those that invite a wide ranging or imaginative response - the results will be difficult to collate and present numerically i.e. qualitative data
What is the definition of closed questions?
Questions to which a limited number of pre-set answers is offered i.e. quantitative data
Why is market research needed?
To market effectively, businesses need information about customer wants, market demand, competition, distribution channels and so on; this information needs to be updated regularly, because businesses operate in a dynamic environment.
Why do businesses need accurate and up-to-date information?
- Changes in technology
- Changes in consumer tastes
- Changes in the product ranges of competitors
- Changes in economic conditions
What are the purposes of market research?
- To reduce the risks associated with new product launches
- To explain patterns in sales of existing products and market trends
- To assess the most favoured designs, flavours, styles promotions and packages for a product
- To gain a more detailed understanding of consumer’s wants needs
- To forecast future trends
What are some methods of primary research?
- Observation of consumer behaviour and trends
- Postal surveys
- Telephone interviews
- Online surveys
- Face-to-face surveys
- Focus groups
- Test marketing (testing marketing on a smaller group and analysing their reaction before going full scale)
- Sampling
What are some methods of secondary research?
Internal secondary research:
- Pre-existing business records
External secondary research:
- Commercial market research organisations
- The government
- Competitors
- Trade publications
- The general media
What are the advantages of primary research?
- Up to date and therefore more useful than secondary data
- Relevant as it is collected for a specific purpose and so directly addresses the questions the business wants answers to
- Confidential - no other businesses have access to the data
What are the disadvantages of primary research?
- Costly
- Time consuming
- Can be doubts over accuracy and validity due to sampling errors for example
What are the advantages of secondary research?
- Often obtainable very cheaply
- Identifies the nature of the market and assists with planning of primary research
- Obtainable quickly without having to undertake complex data-gathering methods through primary research
- Allows comparison of data from different sources
- Provides more data and more opinions
What are the disadvantages of secondary research?
- May be out of date
- It may not be entirely suitable or relevant as it was not collected for the specific purpose of the business
- Data collection methods and accuracy might be unknown or not trusted
What are the 4Ps of the marketing mix?
- Product
- Price
- Promotion
- Place (distribution channels)
What are the 4Cs of the marketing mix?
- Customer solution
- Cost to customer
- Communication with customer
- Convenience to customer
What is the definition of the marketing mix?
The four key decisions that must be taken in the effective marketing of a product
What is the definition of customer relationship management (CRM)?
Using marketing activities to establish successful customer relationships so that existing customer loyalty can be maintained
What is the definition of brand?
An identifying symbol/name/image/trademark that distinguishes a product from its competitors
What is the definition of product positioning?
The consumer perception of a product or service as compared to its competitors
What is the definition of a product portfolio analysis?
Analysing the range of existing products of a business to help allocate resources effectively between them
What is the definition of the product life cycle?
The pattern of sales recorded by a product from launch to withdrawal from the market, and is one of the main forms of a product portfolio analysis
What is the definition of consumer durable?
Manufactured product that can be reused and is expected to have a reasonably long life e.g. car or washing machine
What is the definition of extension strategies?
Marketing plans to extend the maturity stage of the product before a brand new one is needed
What is the definition of price elasticity of demand?
Measures the responsiveness of demand following a change in price
What is the definition of mark-up pricing?
Adding a fixed mark-up for profit to the unit price of a product
What is the definition of target pricing?
Setting a price that will give a required rate of return at a certain level of output/sales
What is the definition of full cost pricing?
Setting a price by calculating a unit cost for the product (allocated fixed and variable costs) and then adding a fixed profit margin
What is the definition of contribution cost pricing?
Setting prices based on the variable costs of making a product in order to make a contribution towards fixed costs and profit
What is the definition of competition based pricing?
A firm will base its price upon the price set by its competitors
What is the definition of dynamic pricing?
Offering goods at a price that changes according to the level of demand and the customer’s ability to pay
What is the definition of penetration pricing?
Setting a relatively low price often supported by strong promotion in order to achieve a high volume of sales
What is the definition of market skimming?
Setting a high price for a new product when a firm has a unique of highly differentiated product with low price elasticity of demand
What are the four phases of the product life cycle?
- Introduction
- Growth
- Maturity
- Decline
How do you calculate price elasticity of demand?
percentage change in demand ÷ percentage change in price
0 = perfectly inelastic
< 1 = inelastic
1 = unit elasticity
> 1 = elastic
What is the definition of promotion?
The use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorship and public relations to inform consumers and persuade them to buy
What is the definition of above-the-line promotion?
A form of promotion that is undertaken by a business by paying for communication with consumers
What is the definition of advertising?
Paid-for communication with consumers to inform and persuade e.g. TV
What is the definition of below-the-line promotion?
Promotion that is not a directly paid-for means of communication, but based on short term incentives to purchase
What is the definition of sales promotion?
Incentives such as special offers or special deals directed at consumers or retailers to achieve short term sales increases and repeat purchases by consumers
What is the definition of personal selling?
A member of the sales staff communicates with one consumer with the aim of selling the product and establishing a long-term relationship between company and consumer
What is the definition of sponsorship?
Payment by a company to the organisers of an event or team/individuals so that the company name becomes associated with the event/team/individual
What is the definition of public relations?
The deliberate use of free publicity provided by newspapers, TV and other media to communicate with and achieve understanding by the public
What is the definition of branding?
The strategy of differentiating products from those of competitors by creating an identifiable image and clear expectations about a product
What is the definition of a channel of distribution?
This refers to the chain of intermediaries a product passes through from producer to final consumer
What is the definition of internet (online) marketing?
Refers to advertising and marketing activities that use the Internet, email and mobile communications to encourage direct sales via electronic commerce
What is the definition of e-commerce?
The buying and selling of goods and services by businesses and consumers through an electronic and online medium
What is the definition of viral marketing?
The use of social media sites or text messages to increase brand awareness or sell products
What is the definition of an integrated marketing mix?
The key marketing objectives complement each other and work together to give customers a consistent message about the product
What are the advantages of a direct distribution channel from producer to customer?
- No intermediaries so no mark-up or profit margin taken by other businesses
- Producer has complete control over the marketing mix - how the product is sold, produced and priced to customers
- Quicker than other channels
- May lead to fresher food products
- Direct contact with consumers offers useful market research
What are the disadvantages of a direct distribution channel from producer to customer?
- All storage and stock costs have to be paid for by the producer
- No retail outlets limits the chances for consumers to see and try before they buy
- May not be convenient for the customer
- No advertising or promotion paid for by intermediaries
- Can be expensive to deliver each item sold to consumers
What are the advantages of an indirect distribution channel through a retailer (one intermediary channel)?
- Retailers hold stocks and pay for storage costs
- Retailers have product displays and offers after sales service
- Retailers often in locations that are convenient to customers
- Producers can focus on production - not on selling the products to consumers
What are the disadvantages of an indirect distribution channel through a retailer (one intermediary channel)?
- Intermediary takes a profit mark-up and this could make the product more expensive to final consumers
- Producers lose some control over the marketing mix
- Retailers may sell products from competitors too, so there is no exclusive outlet
- Producer has delivery costs to retailer
What are the advantages of an indirect distribution channel through a wholesaler and a retailer (two intermediaries channel)?
- Wholesaler holds goods and buys in bulk from producer
- Reduces inventory storage costs of producer
- Wholesaler pays for transport costs to retailer
- May be the best way to enter foreign markets where producer has not direct contact with retailers
What are the disadvantages of an indirect distribution channel though a wholesaler and a retailer (two intermediaries channel)?
- Another intermediary - takes a profit mark-up. May make the final good to the consumer more expensive
- Producer loses further control over marketing mix
- Slows down distribution chain
