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Business > Unit 3: Marketing > Flashcards

Unit 3: Marketing Flashcards

1
Q

what is the role of marketing?

A

identifying customer needs, satisfying customer needs, maintaining customer loyalty, building customer relationships, gaining information about customers

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2
Q

market share

A

the percentage of total market sales held by one brand or business

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3
Q

why may consumer spending patterns change?

A

consumer tastes change, changes in technology, changes in income, aging populations

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4
Q

why have some markets become more competitive?

A

internet / e-commerce, transportation improvements (facilitate product transportation), globalisation

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5
Q

how can businesses respond to changing patterns and increased competition?

A

maintain good customer relationships, constantly improve its existing product, bring out new products to maintain their customer’s interest, keep costs low to maintain competitiveness

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6
Q

mass market

A

a product sold and designed to appeal to the general population

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7
Q

advantages of a mass market

A

large sales

can benefit from economies of scale

if the business sells several variations of products, the failure of one product will most likely not affect the sales of the other products

large sales create more opportunities for business growth

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8
Q

disadvantages of a mass market

A

high levels of competition between firms

high advertising costs

loss of sales due to the product not meeting the specific needs of the customers

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9
Q

niche market

A

a small, specialized segment of a larger market

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10
Q

advantages of a niche market

A

allows for smaller businesses to succeed without the threat of competition from larger businesses

the product will be targeted on the specific needs of the customers

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11
Q

disadvantages of a niche market

A

limited number of sales

businesses will often specialize in only one product - if the product fails, the business fails

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12
Q

market segmentation

A

when a market is broken down into sub-groups that share similar characteristics

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13
Q

how does segmenting a market help a business

A

makes marketing expenditure more cost-effective by creating and advertising a product that caters to the specific needs of each segment

by identifying a segment that doesn’t yet have a product that fulfills its needs can open opportunities fro a business without any competition

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14
Q

what are the most common ways of segmenting a market?

A

socio-economic group, age, region / location, gender, lifestyle, use of product, occupation, etc.

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15
Q

product-orientated business

A

a business that produces a product first and then tries to find a market for it

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16
Q

market-orientated business

A

a business that first carries out market research to find out what the consumer wants and then produces a product to fulfill those wants/needs

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17
Q

market research

A

the process of gathering, analyzing, and interpreting information about a market

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18
Q

primary research

A

first-hand data collected by the business getting in contact with potential or existing customers

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19
Q

secondary research

A

information that has already been collected and is available for the use of others

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20
Q

benefits of primary research

A

data is relevant and up to date

competitors don’t have access to your data - ‘competitive edge’

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21
Q

limitations of primary research

A

it can be expensive

is time consuming

it can be challenging to find participants

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22
Q

benefits of secondary research

A

low cost

fast and easy to find

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23
Q

limitations of secondary research

A

data can be outdated

data can be too broad and not specific enough for the target market

there might be a variable that changes the data that you are not aware of

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24
Q

what factors influence the accuracy of market research data?

A

How carefully the sample was drawn up, its size, the types of people selected etc.

How questions were phrased in questionnaires and surveys

Who carried out the research: secondary research is likely to be less reliable since it was drawn up by others for a different purpose at an earlier time.

Bias: newspaper articles are often biased and may leave out crucial information deliberately.

Age of information: researched data shouldn’t be too outdated. Customer tastes, fashions, economic conditions, technology all move fast and the old data will be of no use now.

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25
Q

what are the 4P’s?

A

product, price, place, promotion

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26
Q

product

A

the good or service being produced and sold in the market

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27
Q

price

A

the amount of money producers are willing to sell or consumer are willing to buy the product for.

28
Q

place

A

how the product is distributed from the producer to the final consumer.

29
Q

promotion

A

marketing activities used to communicate with customers and potential customers to inform and persuade them to buy a business’s products.

30
Q

costs of developing new products

A

market research / analysis

trial products and wasted products

lack of sales if the target market is wrong

loss of company image if the product fails

31
Q

benefits of developing new products

A

unique selling point - no or little competitors

may allow the business to later expand into other existing markets

32
Q

how does brand image impact sales and customer loyalty?

A

it gives the product an identity that makes it stand out from its competition

33
Q

what is the role of packaging

A

1) it has to be suitable for storing the product - so the product doesn’t melt, spoil, break, etc.
2) it has to appeal to the customer and be eye-catching

34
Q

what are the main stages of a product life cycle?

A

1) introduction - product is introduced to the market and sales are slow as customers get acquainted to the product
2) growth - sales start growing rapidly
3) maturity - sales increase more slowly
4) saturation - sales stay stable at their highest point
5) decline - sales start dropping

35
Q

what are some ways to extend a product’s life cycle?

A

introduce new variations of the original product, sell into new markets, introduce improved versions of the original product, make the product’s design more appealing

36
Q

what is elastic demand?

A

Elastic demand is when price or other factors have a big effect on the quantity consumers want to buy. Elastic demand is something more visible when consumers respond to price changes. If the price goes down just a little, they’ll buy a lot more. If prices rise just a bit, they’ll stop buying as much and wait for them to return to normal.

37
Q

what is inelastic demand

A

Inelastic demand is when people buy about the same amount, whether the price drops or rises. This situation happens with things that people must have, like gasoline and food. Drivers must purchase the same amount even when the price increases. Likewise, they don’t buy much more even if the price drops; and it doesn’t affect sales revenue overall, even with the change in price. Inelastic demand means demand doesn’t change even if a change in price is established.

38
Q

what does the cost-plus pricing method consist of? + advantages and disadvantages

A

Setting price by adding a fixed amount (%) to the cost of making the product

Advantages:
Quick and easy to work out the price
Makes sure that the price covers all of the costs

Disadvantages:
Price might be set higher than competitors or more than customers are willing to pay, which reduces sales and profits

39
Q

what does the competitive pricing method consist of? + advantages and disadvantages

A

Setting a price similar or lower to that of competitors’ products which are already available in the market

Advantages:
product is not over or under priced

disadvantages:
it costs time and money to research about competitor’s prices

40
Q

what does the penetration pricing method consist of? + advantages and disadvantages

A

Setting a very low price to attract customers to buy a new product in an existing market

Advantages:
Attracts customers more quickly
Can increase market share quickly

Disadvantages:
Low revenue due to lower prices
Cannot recover development costs quickly

41
Q

what does the price skimming method consist of? + advantages and disadvantages

A

Setting a high price for a new product that is unique or very different from other products on the market.

Advantages:
Profit earned is very high
Helps recover/compensate research and development costs

Disadvantages:
It may backfire if competitors produce similar products at a lower price
Customers may be reluctant to purchase the product due to its high price

42
Q

what does the promotional pricing method consist of? + advantages and disadvantages

A

Setting the price of a few products at below cost to attract customers into the shop in the hope that they will buy other products as well

Advantages:
Helps to sell off unwanted stock before it becomes out of date
A good way of increasing short term sales and market share

Disadvantage:
Revenue on each item is lower so profits may also be lower

43
Q

what is psychological pricing?

A

when particular attention is paid to the way the pricing of the product will accept the consumer’s perception of it. e.g:

  • supermarkets charge less for products that are purchased often so customers think they are being given a good value for money
  • charging 99cents instead of $1 so it seems cheaper
  • charging a lot for a high-quality product so the customer purchases it as a status symbol
44
Q

what is dynamic pricing?

A

when different consumer groups are charged differently for the same product. e.g:

  • an airline charging more for a flight in a more popular airport
  • a football stadium charging more for seats at a more popular game
45
Q

what type of pricing strategy should be used to cover costs and ensure a profit is made?

A

cost-plus pricing

46
Q

what type of pricing strategy should be used to make high profits?

A

price skimming

47
Q

what type of pricing strategy should be used to enter new markets?

A

penetration pricing

48
Q

what type of pricing strategy should be used to affect consumers’ perceptions of the product?

A

psychological pricing

49
Q

what type of pricing strategy should be used to increase sales and get an edge over competitors?

A

promotional pricing, competitive pricing

50
Q

what type of pricing strategy should be used to maintain market share and not be outmatched by competitors?

A

competitive pricing

51
Q

what type of pricing strategy should be used to charge different prices to customers for the same service depending on the level of demand?

A

dynamic pricing

52
Q

what are the 4 main distribution channels?

A

Manufacturer to consumer, producer to retailer to consumer, producer to wholesaler to retailer to consumer, producer to agent to wholesaler to retailer to consumer

53
Q

what are the advantages and disadvantages of the manufacturer to consumer distribution channel?

A

Advantages:
– All of the profit is earned by the producer
– The producer controls all parts of the marketing mix
– Quickest method of getting the product to the consumer

Disadvantages:
– Delivery costs may be high if there are customers over a wide area
– All storage costs must be paid for by the producer
– All promotional activities must be carried out and financed by the producer

54
Q

what are the advantages and disadvantages of the manufacturer to retailer to consumer distribution channel?

A

Advantages:
– The cost of holding inventories of the product is paid by the retailer
– The retailer will pay for advertising and other promotional activities
– Retailers are more conveniently located for consumers

Disadvantages:
– The retailer takes some of the profit away from the producer
– The producer loses some control of the marketing mix
– The producer must pay for delivery of products to the retailers
– Retailers usually sell competitors’ products as well

55
Q

what are the advantages and disadvantages of the manufacturer to wholesaler to retailer to consumer distribution channel?

A

Advantages:
– Wholesalers will advertise and promote the product to retailers
– Wholesalers pay for transport and storage costs

Disadvantages:
– Another middleman is added so more profit is taken away from the producer
– The producer loses even more control of the marketing mix

56
Q

what are the advantages and disadvantages of the manufacturer to agent to wholesaler to retailer to consumer distribution channel?

A

Advantages:
– The agent has specialised knowledge of the market

Disadvantages:
– Another middleman is added so even more profit is taken away from the producer

57
Q

what is e-commerce?

A

the buying and selling of goods and services using computer systems linked to the internet

58
Q

what opportunities and threats does e-commerce create for businesses?

A

Opportunities:

  • low-cost promotion
  • global coverage
  • able to access many consumers
  • shops might not be needed

Threats:

  • website creation / upkeep is expensive
  • no direct contact with consumers
  • competition form other websites
  • transport costs
59
Q

what opportunities and threats does e-commerce create for consumers?

A

Opportunities:

  • wider choices of products
  • easier than going to a store
  • usually cheaper
  • accessible 24/7

Threats:

  • no communication with manufacturer
  • online security issues
60
Q

what are the aims of promotion?

A
  • Inform customers about a new product
  • Persuade customers to buy the product
  • Create a brand image
  • Increase sales and market share
61
Q

what are Above-the-line promotions?

A

all of the mass marketing utilized to promote a product when displayed to the public. When mass promoting a product there’s a variety of different methods and mediums to carry this out, such as social media, billboards, radio advertising, TV advertising, magazines, etc. This is considered an efficient way to inform people about your product due to the fact that they are being exposed to it without their previous knowledge and having this presented to them in ordinary day-to-day situations; even when it’s least expected of the customer. The use of ATL is optimal for reaching a wider target audience

62
Q

what are below-the-line promotions?

A

This is a way in which products are promoted through a more direct channel so they can reach people in a direct way. For example; sales promotion, direct marketing and mail, sponsorships and so on.

63
Q

opportunities of entering new markets

A
  • growth potential

- a chance to escape the saturated home market

64
Q

problems of entering new markets

A
  • lack of knowledge
  • cultural differences
  • exchange rates
  • import restrictions
  • increased transport cost
  • risk of failure
65
Q

what are the most common methods of overcoming the problems created of entering new markets abroad?

A

joint ventures with local brands- allows businesses to gain important local knwoledge

licensing - when the firm gives a local brand permission to produce their patented products so they don’t have to transport them abroad

International franchising - local knowledge is used to best expand the brand “think global, act local”

localizing existing brands - still a brand image but with local tastes and culture

Business (6 decks)

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