Unit 3 (Marketing) Flashcards
Decision making to improve marketing performance
What are marketing objectives?
Goals and targets set by the marketing department.
What is the difference between sales volume and sales value?
Volume is the NUMBER of products or service sold (whole numbers) and value is a monetary amount earned from selling products or services.
What is market size?
Total sales revenue made from selling all the products or services that a business has to offer over a year.
What is market growth and sales growth formula?
New - Old / Old x 100
What is the formula for market share?
Sales of business/Total Market Sales x 100
What is a brand ?
A brand is an identifying symbol, mark, logo or name that businesses use to distinguish one company from another.
What is the role of marketing?
The process of identifying, anticipating and satisfying customer needs profitably.
What is a value of marketing objectives?
- Ensures functional activities consistent with corporate objectives
- Provides a focus for marketing decision making and effort
- Establishes priorities for marketing resources and effort
Problems with setting Marketing objectives?
- fast changing external environment (legislation changes, new competitors)
- Potential conflict between marketing objectives (eg, increasing market share by cutting costs damages objectives for brand perception)
- Easy to be too ambitious
Internal influences of marketing objectives?
- Corporate objectives
- Finance
- Human resources
- Operational issues
- Business culture
External influences on marketing objectives?
- Competitor actions
- Market dynamics (market size/growth)
- Economic environment
What is primary research?
New or original data gathered by the researchers (information does not yet exist)
What is secondary research?
Using a source that has already got the data
What is qualitative data?
Non-numeric data eg. opinions, feelings, ideas, etc.
What is quantitative data?
Numerical data (closed questions)
Methods of primary research.
Surveys
Customer interviews
test marketing
Focus groups
Observation
Methods of secondary market research?
Government sources
Trade publications (Trade journals eg, The Grocer, Retail Weekly)
Internet
Media
What is sampling?
Happens when researchers question a portion of a larger group and use the results to make conclusions about the whole group.
What is random sampling?
Every person has equal chance of being selected.
What is stratified sampling?
Population divided into smaller subgroups.
What is quota sampling?
Population divided into strata and then required number of respondents taken from each strata.
What does correlation mean?
A relationship between two variables
What is extrapolation?
When a trend line has been extended (can be used to predict future sales)
What is a moving average?
Takes a data series and smoothes the fluctuations in data to show an average. Aim is to take out the extremes of data from period to period.
What are the factors to consider when extrapolating?
- Product life cycle
- Pace of technological innovations
- Growth of the global economy
- Rise of middle classes in emerging economies
- Market saturation for smartphones
Benefits of using extrapolation?
Simple method of forecasting sales
Not much data required
Quick and cheap
Drawbacks of using extrapolation?
Unreliable if there are significant fluctuations in previous data
Assumes past trend will continue into the future (unlikely in many competitive business environments)
Ignores qualitative factors
What does a confidence interval give?
A percentage profitability that an estimated range of possible values in fact include that the actual value being estimated
Examples of when you’d use confidence intervals:
Quality Management - Reliability of machinery
Market research - Statistical estimates for sales forecasting
What does Price Elasticity of Demand mean? (PED)
Measures the extent to which the quantity of a product demanded is affected by a change in price
What does Income Elasticity of Demand mean? (YED)
Measures the extent to which the quantity of a product demanded is affected by a change in consumer income
What is the formula for PED?
% change in quantity demanded divided by % change in price ( will always be negative)
Why does PED matter?
If price is elastic, by charging less overall revenue would increase
If price increases revenue would fall
Factors influencing PED?
Brand strength
Necessity
Habit
Availability of substitutes
Time
What are the limitations of calculating and using elasticities?
Difficult to get reliable data
Consumer tastes
Many markets subject to rapid technological change
What is market segmentation?
Dividing a market into parts that reflect different customer needs and wants
What are the categories of market segments?
Demographic, Geographic, Income, Behavioral
What is glocalisation?
Altering your product slightly for the location you’re in
What is market positioning?
The place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors.
What are the types of consumer goods?
Convenience, Shopping and Specialty
What are consumer goods?
Those bought by consumers rather than companies to manufacture other goods.
What are values of the Boston Matrix?
Good starting point when reviewing existing products for strategy
Conclusions drawn to transfer cash from stars/cows to close down or sell off dogs
What is predatory pricing?
Involves decreasing the price of a product substantially with the intention of undercutting the competition creating a barrier to entry.
What are the limitations of the Boston Matix?
Products may be in between
High market share does not always lead to high profits and high costs also involved
What is cost plus pricing?
The total cost of the products are worked out and then a fixed percentage of a profit is added on top
What is price skimming?
Used when launching a new product
Price is set high to start and then decreased over time or with a new product launch
What is competitive pricing?
Priced in line with competition
Customers will have to judge a product on non price related methods (quality etc)
What is price penetration?
Setting prices really LOW on a new product launches to persuade customers to try the product and as market share grows, price increases
What is direct distribution?
Sold directly from distributor to consumer
What is above the line advertising (ATL)?
Obvious or well aware business is trying to sell you something
eg TV, Online, Cinema ads
What is below the line advertising?
More subtle form of advertising to niche markets eg. Flyers, website banners and popups
What are methods of sales promotion?
BOGOFF
Price discounts
Coupons
Samples/giveaways
Special events
Points of sales
Benefits of BOGOFF
Popular with shoppers
Good way to encourage people to switch brands
Boosts sales, therefore revenue increases
Drawbacks of BOGOFF
Loss of profit due to increase in costs
Only useful in short term
Benefits and drawbacks of price discounts
Great way to clear old or cut off date stocks
Customers may regard business as cheap option
Benefits of money off coupons
Can help customer feel they are getting better value for money
Drawbacks of money off coupons
Reduced profits from the costs of running the promotion
Same customers will wait for coupons before purchase
Customs may be wanting to make a purchase anyway
What is points of sales promotion?
Usually a cardboard display stand located close to till within a shop to draw customer attention and trigger an impulse purchase
What are the elements of the promotional mix?
Advertising, Sales promotion, Exhibitions and trade fairs, Packaging, Branding, Personal Selling, Public Relations and Merchandising
What is public relations?
PR is promoting the company’s image to establish a favorable attitude towards to company. It aims t improve the image of the business and aims to increase sales.
What is branding?
Establishing an identity for a product that distinguishes it from competition.
What is a benefit of good branding?
Allows you to charge a higher price which will extend the product life cycle by creating customer loyalty.
What is the difference between informative advertising and persuasive advertising?
Informative aims to increase consumer awareness by providing consumers with factual information eg adverts being centered on the prices and features of a product. But persuasive advertising aims to get consumers to purchase a particular product by for example, claiming the product is better than competition.
What influences businesses choice on promotional mix?
Products position in product life cycle
The type of product
Finance available
Competitors actions
What is the promotional mix?
The combination of methods to communicate with customers to inform them of their product and persuade them to buy them.
What is some benefits of price penetration?
Win over competitors
Encourages new customers to try your product
Increases market share
Can deter other competitors from entering market so limits competition
Drawbacks of price penetration?
Can be high risk due to high upfront investment and high profits in long term
Can encourage influx in customers who will not be loyal to the brand - may only buy from you again if your prices remain low
Low profit margins due to lower costs
