Unit 3: Marketing Flashcards
What is marketing
process of identifying, anticipating & satisfying customer needs profitably
What is the first stage of marketing
conducting market research to discover wants of customers & factors that influence those wants
What are the 7 p’s
- price
- promotion
- place
- people
- product
- physical environment/evidence
- process
How do you calculate sales value
Volume x average price
When is sales value best used as a measurement
when comparing businesses whose products have diff price levels
When is sales value better to use as a measurement than sales volume
when comparing multi- product firms
What’s a problem with sales value
It’s difficult to visualise
What is market size usually measured in terms of
sales volume & sales value
Firms in larger markets will find it easier to compete
TRUE or FALSE
FALSE - they’ll find it more difficult to compete
Why is market size not usually a marketing objective for many businesses
They can’t influence/control it
What is market size usually and indicator of
maximum potential sales for a firm in a particular market
How do you calculate market size
(2 formulas)
number of units sold in market (per period) x average selling price
firm’s revenue (per period) ÷ market share
How do you calculate market growth
(market size in yr - market size in previous yr) ÷ market size in previous yr x 100
What is market growth usually a key indicator of
Existing and potential market entrants
What is a benefit of being active in a market that has fast growth potential
rapid increase in sales volume & sales value
Give 2 factors influencing market growth
- economic growth
- nature of the product
- change in taste
- social changes
- fashion
What’s a positive of identifying market trends before other businesses
When the market continues to grow, the business will have more expertise and brand loyalty (more competitive than rivals)
How do you calculate sales growth
(Sales in that yr - sales in previous yr) ÷ sales in previous yr x 100
What is sales growth achievement influenced by
external factors & firms own efforts
Give 2 marketing objectives based on sales growth
- a given increase in the level of sales volume
- a given increase in sales value
- a percentage rise sales volume
- a percentage rise sales value
How do you calculate market share
(sale of one product/brand/company ÷ total sales in the market) x 100
What does market share explain
How the overall market is split between competitors
Market share is an excellent measure of a company’s success
TRUE or FALSE
TRUE
Market share can only increase in what circumstance
if the company is performing better than its rivals
What is a problem with market share
not always reliable indicator of success:
- can be difficult to define a market
- market declining = firm’s market share may grow bc competitors leaving the market
What does increasing brand loyalty enable a business to do (give 2 examples)
- gain regular repeat purchases from loyal customers
- spend less money on promotions & advertising
- charge higher prices bc loyal customers = less concerned abour price
Marketing position, innovation and survival/security are marketing objectives
TRUE or FALSE
TRUE
Give 2 benefits of setting market objectives
- Specific obj = clarity for employees & enables marceting department a
staff to see if they’ve succeeded / failed to meet expectations - If members of department have common purpose = more likely to work as a team
- measurable & timed obj = allows improvement of efficiency
- marketing department gives clear indication of importance of each obj =
enables employees to recognise own priorities = consistent w/ needs of business
Give a problem with setting market objectives
- external changes = not easy to predict = marketing obj may be based on incorrect assumptions
- potential conflict between marketing objectives
- businesses may be too ambitious w/ marketing obj = marketing obj loses its value
- business may not have sufficient resources to achieve obj
- If obj imposed instead of agreed, employees may not put in effort to achieve the goals set
Give 4 external influences on marketing objectives
- market factors/dynamics
- competitors actions & performance
- technological change
- ethical & environmental factors
- economic factors e.g. interest rates, recession, exchange rates
- political factors
- suppliers
Give 3 internal influences on marketing objectives
- business objectives
- finance
- HR
- operational issues
- business culture
Name 3 different aspects of market research
- research and development
- cash flow forecasting
- customer service
- sales forecasting
- budgeting
- market segmentation
Market research is important because customers differ in terms of…
(Give 2 examples)
- benefit they want
- amounts they’re able / willing to pay
- media they see
- time & place they buy
Give 2 insights provided by effective market research
- dimensions of the market
- competitor strategies
- need, wants & expectations of customers
Market research is classified in 2 ways according to…
- how the data is collected (primary/secondary market research)
- content of the data (quantitative/qualitative)
Give 3 types of primary research
- experiment
- observation
- surveys
- focus groups
- test marketing
Give an advantage and disadvantage of experiments
ADVANTAGES:
- relatively cheap way of finding out customer preferences
- considers actual customer behaviour
DISADVANTAGES:
- may delay introduction of potentially successful strategy
- customer behaviour may not be same throughout country
Give an advantage and disadvantage of observation
ADVANTAGES:
- layout of displays can be modified if observation reveal any problems
DISADVANTAGES:
- shows whats happening instead of why it taking place
- expensive to employ specialist psychologists to observe limited behaviour
- time consuming
Give an advantage and disadvantage of focus groups
ADVANTAGES:
- firm can gather detailed info & modify products or identify gaps in the marketplace
- can uncover new ideas on how to market products
DISADVANTAGES:
- sometimes bias group consists of ppl who have interest in product = less critical than average consumer
- expensive to operate
Name 2 different type of surveys
- personal interviews
- postal surveys
- telephone interviews
- internet surveys
Give an advantage and disadvantage of personal surveys
ADVANTAGES:
- wide range of info obtained - questions can be opener or closed
- interviewer can explain uncertainties = avoid misinterpretation
DISADVANTAGES:
- can be time - consuming
- interview may give false answers
Give an advantage and disadvantage of postal surveys
ADVANTAGES:
- cheap
- may avoid bias of personal interview
DISADVANTAGES:
- response rates usually low
- no guarantee the responses are representative
Give an advantage and disadvantage of telephone interviews
ADVANTAGES:
- cheap
- can be targeted directly at known customers
DISADVANTAGES:
- increased use of telesales = customer resentment
- interviewees dont want to spend so much time talking
Give an advantage and disadvantage of internet surveys
ADVANTAGES:
- relatively inexpensive
- can be updated frequently
DISADVANTAGES:
- less relevant for org whose target market doesn’t use internet
- biased towards ppl w/ interest towards product/service
Secondary market research is more expensive than primary research
TRUE or FALSE
FALSE - it’s more cost-effective in comparison to primary research
Give 3 key sources of secondary market research
- Gov publications
- trade press & magazines
- market research orgs/reports
- google /internet
- loyalty cards
- competitors website/ marketing marenal
Give 2 benefits of secondary market research
- free / easy to obtain
- helpful in identifying trends overtime
- good source of market insight
- quick to access & use
Give 2 drawbacks of secondary market research
- available to all orgs = doesn’t give advantage over competitors
- not tailored to business needs
- Specialist reports often quite expensive
- Secondary user may not know level of accuracy & reliability
- potentially outdated (business environment changes rapidly)
What is qualitative research based on
documents, beliefs, opinions, personal accounts in detail
What is the aim of qualitative research
to understand why customers behave in a certain way or respond to a new product
Give 2 benefits of qualitative research
- gain greater insight into what it needs to do to appeal to consumers
- can highlight issues the business weren’t aware of
- gives detailed insight to customers thinking progress process when they buy products
- effective way of testing elements of marketing mix e.g.promotional campaigns
Give 2 drawbacks of qualitative market research
- expensive - requires skilled personnel to interpret it
- conducted on small scale usually = not representative
- difficult to organise the data & compare it w/ other data
Give 2 benefits of quantitative data
- summarises data in concise & meaningful way
- relatively easy to analyse - easier to compare w/ other orgs e.g. competitors
- can be used to identify trends & project future trends
Give a drawback of quantitative research
- focuses on what instead of why - doesn’t give detailed data
- can lack validity & reliability if sample is biased or too small
- doesn’t explain reasons behind numerical trends
What are the 3 sampling methods
- random
- quota
- stratified
What is random sampling
When every member of the population has an equal chance at selection
Give an advantage of random sampling
- simple to derign & interpret
- able to avoid bias
Give a disadvantage of random sampling
- anyone may be selected = may not be representative of market as a whole
- need a complete & accurate population listing
What is stratified sampling
When the population is divided into subgroups, then a simple random sample is selected within each group
Give an advantage of stratified sampling
- can reduce sampling error
- can provide more accurate estimates for all subgroup related to the research
- can save money by requiring a smaller sample size
Give a disadvantage of stratified sampling
- can be more complicated to analyse the data
- can be difficult to classify every member of the population into a subgroup especially if the characteristics aren’t clear
What is quota sampling
The population divided by the most important variables e.g. income, age,
location etc. and a predetermined number of subjects is selected from each group
Give an advantage of quota sampling
- quick & easy way of obtaining a sample - ensures representation of important groups within the population
Give a disadvantage of a quota sampling
- not random = risk of bias
- need to understand the pop to be able to identify basis of stratification
When conducting primary research what does a business need to balance
the need for accuracy against the cost of the survey
The larger the sample, the more reliable the data
TRUE or FALSE
TRUE
What % of confidence should the results of a sample size be for the results to be acceptable
95
Give 2 benefits of sampling
- can provide a good indication of the likely behaviour of whole market
- using sampling before making marketing decisions can avoid errors
- can be used flexibly & adapted to different needs
- reliable info can be gathered from a fairy small cross- section of ppl
Give 2 drawbacks of sampling
- may be unrepresentative
- may be bias in questions or in the answers they encourage
- may be difficult to locate suitable respondents
- in markets where tastes are constantly changing, the time taken to carry out & process the data may mean the opinions are out of date
What are the 3 statistical techniques used in the interpretation of marketing data
- confidence intervals
- correlation
- extrapolation
What are confidence intervals used for
to assess the reliability of sampled data when trying to forcast figures
the degree to which statistics are a reliable predictor of actual events is known as…
Confidence level
What are confidence intervals written as
a plus or minus figure to show the accuracy of Statistical reruits
Give 2 factors that influence the confidence interval
- sample size
- population size
- percentage of sample choosing a particular answer
What do correlations look at
The strength of a relationship between two variables
The dependent variable is the factor causing the other factor to change (x-axis
TRUE or FALSE
FALSE - that is the independent variable
define an independent variable and a dependent variable
independent variable - the factor causing the other factor to change (x-axis)
dependent variable - the factor being influenced (y-axis)
What are the 3 types of correlations
- positive
- negative
- no correlation
What has to be discovered before any conclusions are drawn about there being a link between 2 sets of info
casual link
What is extrapolation
The use of trends established from historical data to forecast the future
What two ways can extrapolation be carried out and which one is recommended for greater accuracy
Visually or by calculation
(calculation is recommended for greater accuracy)
What factors should be considered with extrapolation (name 2)
- product life cycle
- pace of technological innovation
- growth of global economy
Give 2 strengths of extrapolation
- quick & cheap
- simple method of forecasting
- It’s common for past trends to continue into the future
- helps ensure a steady growth bc targets will be based on past data
- not much data required
Give 2 weaknesses of extrapolation
- less reliable if theres fluctuations in historical data
- assumes past changes will continue & therefore doesn’t take into account changes in business environment
- Ignores qualitative factors e.g. changes in taste & fashion
- ignores product life cycle (products will ultimately decline in sales)
What does elasticity of demand measure
the degree to which the demand for a good/service is affected by the value of another variable
What are the 2 elasticity of demands
- income elasticity of demand
- price elasticity of demand
What does price elasticity of demand measure
the extent to which the quantity of a product demanded is affected by a change in price
What is the value of PED if a change in price leads to a greater percentage change in the quantity demanded than the percentage (elastic demand)
Greater than 1
What is the value of PED if a change in price leads to a smaller percentage change in the quantity demanded than the percentage (inelastic demand)
Less than 1
What is perfect inelastic demand
when the price elasticity demand is 0 which means there’s no change in quantity demand when price changes
What is the value of PED where the percentage of change in quantity demanded is the same as the percentage change in price (unitary elasticity)
1
Give 3 factors that influence PED
- necessity
- habit
- availability of substitutes
- brand loyalty
- time
What does income elasticity of demand indicate
how demand will be affected by changes in income
Luxury products IED is less than 1
TRUE OR FALSE
FALSE - it’s more than 1 (as income grows, proportionally more is spent on luxuries)
Luxury products are income elastic
TRUE or FALSE
TRUE
Typically, what is the IED of necessity products (income inelastic)
Less than 1 but more than 0
What type of product have negative income elasticity
Inferior products
When does demand fall for inferior goods
demand for a product falls as income increases bc ppl can afford better alternatives
Name 2 limitations of price & income elasticity of demand
- can be unreliable bc of the difficulties involved in calculating it
- there are other factors that affect demand e.g. change in consumer tastes, new competitors etc.
- many markets are subject to rapid technological change - makes previous data unreliable
- competitors will react to match the change - pricing decisions can’t be taken in isolation
Firms tend to like products with inelastic demand
TRUE or FALSE
TRUE
What do businesses usually support their marketing data with
Qualitative judgments
Give a situation where qualitative judgements are most likely to be included in marketing decisions
- when the product/business is new = no previous info to base predictions off
- theres no clear statistical indication of future sales
- trends have changed = unwise to predict on basis of past statistics
- when the factors influencing sales are not easy to quantify
What is market segmentation
the classification of (potential) customers into groups, each of which responds differently to diff products/ marketing approach
What are the 4 types of market segmentation
- demographic
- geographic
- income (the types of segmentation in this category are often classifed as examples of demographic factors)
- behavioural
Give 2 of the main forms of demographic segmentation
- age
- gender
- ethnicity
Income isn’t an important influence on consumer spending
TRUE or FALSE
FALSE
In the UK, what is the basis for market segmentation
Social class
Give 2 examples of behavioural segmentation
- loyalty
- attitudes
- knowledge
- usage
- lifestyle
The extent to which a particular org might benefit from segmentation depends on the degree to which…
- particular segment can be easily identified
- the firm is able to generate profit from that market segment consumer behaviour varies
- the firm is able to reach that segment directly in its marketing & market research
Give a benefit of market segmentation
- increase market share - an org can identify market segments that haven’t been reached & adapt its products & marketing to reach those segments
- helps make marketing mix more effective
- can extend products into new products
- able to assist new products developments - gaps in market can be used to indicate scope for introducing new products
Give a drawback of market segmentation
- business needs to meet the needs of customers that aren’t included in the chosen segment
- just bc you can identify a segment doesn’t mean you can reach the customers
- successful segmentation requires market segment to be identifiable, reachable & distinct - data may not always be available or reliable
