UNIT 3- Marketing Flashcards
Market research
The main types, and methods
+ advantages and disadvantages
Primary research is original firsthand research and involves collecting the data to yourself
(mostly three focus groups, Observation, online surveys, telephone interview interviews, test marketing, and experiments)
The advantages are that it guarantees the information collected is up-to-date and relevant enabling accurate trends to be revealed. It also allows the person organisation to control ownership of the data.
The disadvantages are that it can be time-consuming and expensive as well as being difficult to collect and requiring resources
Secondary market research is the use of existing data
(in published market research reports, internal transaction data, Google official statistics, trade associations, media reports, and competitive materials
The advantages are that it’s quick and easy together and can provide industry specific information. It’s often easy to analyse and provide provides guidance for further research.
The disadvantages are that it’s not specific to the business and there is a large risk of it being out of date, biased or inaccurate
Quantitive versus qualitative
Quantitive is concerned with and based on data is based on larger samples and therefore more statistically valid and the main methods are various forms of surveys
The advantages are that it is simple and easy to analyse it provides easy to understand results once analysed, relatively quick and easy to collect, objective less acceptable to buyers and therefore easier to draw generalisable and reliable conclusions)
The disadvantages are the lack specific opinions and doesn’t always allow a business to see exactly what a customer thinks, can lack depth and context )
Qualitative research is based on opinions, attitudes, beliefs, and intentions and aims to understand why customers behave in a certain way or how they may respond to a new product. The most common are focus groups and interview interviews.
The advantages are that it gives detailed information allows you to explore context, allows you to gauge how people feel and why they chose certain actions. This is particularly useful for a business with a niche target audience.
Disadvantages are that it can be time-consuming, costly together and analyse. It also cannot be expressed in a graph or chart and there is therefore subjective in nature and up to interpretation.
Test marketing advantages and disadvantages
Test marketing is making a product available on a limited basis to test markets before a wider release to explore consumer response
The advantages of that it reduces risk of a global launch of a bad product, allows for customer feedback, allows for improved product development and modifications, lowest cost, provide provides customer data, able to build buzz about a product
The drawbacks are that it can produce inaccurate results if the sample size is too small, can be costly specifically for smaller companies, time-consuming, can lead to competitors developing a arrival product before the full launch also linked to delays if changes are needed
Market analysis
The interpretation of marketing data
-Correlation
- confidence intervals
- Extrapolation
+ advantages of market analysis
Size of the market, growth in the market, level and intensity of competitors, segmentation+ social trends
Correlation looks at the strength of a relationship between two variables and how they are related positive relation is an incline on a graph negative correlation is a decline on a graph and no correlation is a scattered graph
- Strength of correlation is given a value between minus one and one the higher the figure the stronger the correlation
An independent variable is the variable that causes change in another and
the dependent variable is the variable that is impacted by the change in the independent variable
Confidence intervals help a business understand how reliable and estimate is by using percentages and giving them probability
The advantages of market analysis are that it spot trends and opportunities, analyse success and failures, reduce risks and cost of launching a new business, Taylors products and services to the customers, monitors business performance and demonstrates where the budget should be prioritised, shows growth in the market
Extrapolation
Including what it can be used to do the methods of it
And the advantages and disadvantages
Extrapolation is assuming that previous trends will be predicted in the future
It can be used to measure the performance of individuals and departments to plan the workforce, plan production level levels and schedules, produce realistic and motivating
targets for the company
Can ask individual expert and use management for sales figures and market research to assume that patterns will continue
The advantages are that it can be used to predict future sales and therefore plan operations workforce requirements, marketing efforts et cetera
It can be done relatively quickly a little cost and is particularly useful in predictable markets
The disadvantages are that it’s not reliable in dynamic markets, does not factor and unexpected external changes, assumes in its predictions, could lead to a firm producing less than their potential, could be biased, lack value if too far in the future
Price elasticity of demand
+formula
YED
The price elasticity of demand shows how a change in price will impact the demand
It is calculated by percentage change in quantity demanded/ percentage change in price
Elastic goods is any answer that is greater than one in elastic goods any answer less than one where demand is relatively annex responsive to a change in price and unitary elasticity is an elasticity of exactly one where any price change is cancelled out by the demand change
Income elasticity of demand ,YED
shows the change in quantity demanded with a change of consumer in one
Percentage changing quantity demanded divided by changing consumer income
If the answer is positive and income and an increase in income increases demand which happens for most normal products if the answer is negativea decrease in income increases demand and an increase in income decreases demand this happens for most inferior products
Define marketing
Niche and mass markets
+ advantages and disadvantages
Marketing is identifying in meeting customer needs and expectations profitably
Niche market is a form of marketing that meets the needs of a relatively small number of potential customers for example left-handed products and hearing aids
The advantages are that you can respond quickly to needs of customers, effective marketing expenditure because it is targeted, often less major competition
The disadvantages are that it is vulnerable to market changes, a successful niche may attract competition specifically from larger companies, lower levels of sales and therefore risk of cost increase
Mass markets or undifferentiated marketing is a form of marketing that aims to meet the need of a large number of potential customers for example water and bank companies
Advantages are there although profit margin on each unit may be small cells are often much higher, there is a stability of the market and a stable revenue, economies of scale allow for lower costs per unit
Disadvantages are that the business is less responsive to change in needs and there is often major competition
Market segmentation
Benefits and difficulties
Market segmentation or customer segmentation is the process of dividing the market up into groups of Varian customers including different demographics such as age, gender occupation and social economic group
Benefits of market segmentation is that it allows a better understanding of the companies target market, allows a firm to better design their marketing mix, helps them build a strong brand identity and established loyalty, helps to find new suitable products
The difficulties are that it’s difficult to identify the most important segments for our product or which segments of the most lucrative, constant research is needed to be up-to-date, risk of products becoming too specific to one market segment
Market targeting
+ differentiated and un differentiated marketing
Product proliferation
Deciding the market segment the company will aim to sell their product/services to
Differentiated is targeting several different market segments with different products and undifferentiated is targeting the whole mass market with one product
Products proliferation is when a firm cell is a range of products aimed at different markets
Market positioning
Where where are firms product or services are in the market in relation to its rivals based on factors such as price value quality product use features et cetera
Quality
Low. High Price Low Economy brands. Bargain brands
High Cowboy brands. Luxury brands
The Boston matrix
+ it’s linked to the product life-cycle
+ strategy for each product type
.
Market growth 1- star (growth stage). 3- problems children/ questioned mark (introduction)
2- Cash Cow (maturity). 4- Dog (decline)
Market share
1- investment to sustain growth, build sales and/or market share spend to keep competitors at base, invest to maintain a leadership position
2- defend market share, aim for short-term profits, little need for investment, little potential for future growth, maximise short-term cash flow, use profits to invest in new products
3-invest to increase market share, substantial investment to achieve growth at the expense of powerful competitors, investing promotion and marketing
4- divert sell off or phase out of shelves, not worth investing in, any profit made has to be reinvested to maintain market share, uses up more management and time resources that can be justified at most to focus on a defendable niche
The 7 Ps
Products, place, people, price, process, physical environment, promotion
PROMOTION
+types
+main aims
Promotion =How a firm gets its products known and bought by customers
TV ads, magazine ads, pop ups, offers and coupons, sponsorships etc
- Ensure that customers are aware of the existence of and positioning of products
- persuade customers that their product is better than existing products (encouraging trialing and brand loyalty)
- remind customers about why they may want to purchase their product
- increase sales/ revenue
Main elements of the promotional mix
+ define campaign
+ AIDA acronym hello
Advertising, sales and merchandising, personal selling, public relations/ publicity/ sponsorship, direct marketing
Campaign = all the different mediums through which a firm will promote a product
A- attention I- interest D- desire A- action
Stage in the product’s life cycle, Nature of the product, Competition, Marketing objectives & budget, Target market
Above the line advertising
+advantages and disadvantages
“Above the line” advertising refers to marketing campaign that attempt to reach a wide and diverse audience, primarily focusing on building brand awareness rather than targeting specific customer segments
Eg- television, radio, newspapers, magazines, and billboards
Advantages- wide coverage, control of message, can be effective with repetitiveness, effective for building brand awareness and loyalty
Disadvantages- often expensive, impersonal/ one way communication, lacks flexibility, limited ability to close a sale
Sales Promotion ‘below the line’
+ examples
+ advantages and disadvantages
a marketing strategy that targets specific audiences instead of using mass media.
(Short term incentives to increase sales eg- coupons, money off, free samples + gifts, loyalty points, BOGOF, demonstrations)
Advantages- effective at achieving a quick boost of sales, encourages trials and switch of bands (can gain company market share)
Disadvantages- mainly short term, customers may grow to expect further reductions, may damage brand image (doesn’t work for luxurious or high end brands)
Personal selling
+advantages and disadvantages
Promotion on a person-to-person basis
(Meeting with potential customers via telephone, meetings, retail outlets and knocking on doors)
Advantages- high customer attention, customised message, interactivity, persuasive impact, potential for development of relationship, adaptable, opportunity to close the sale more likely + can receive feedback and respond to objectives
Disadvantages- high cost, labour intensive, (+potential to become intimidating if people get paid solely on commission) expensive and can only reach a limited number of customers
Public relations PR
- main aims
- examples
define sponsorship
Activities that create goodwill towards an individual, business, cause or product
(Not necessarily being paid, spreading awareness/ information given by PR teams)
Main aims are to achieve favourable publicity, build image and reputation of the business and communicate effectively with customers and stakeholders
Eg- promoting new products, enhancing public awareness, promoting social responsibility and obtain favourable reviews and recommendations
Sponsorship= when a payment for an event, person or organisation is given in return for benefit
(Common in sports and arts)
Direct marketing
+advantages and disadvantages
Promotional material directed through mail, email or phone straight to individuals or businesses instead of through retailers/ another alternative source
Advantages- focus limited resources on targeted groups (cost effective if database is well managed) +useful for SME (small to medium enterprises), personalised message, easy to measure success
Disadvantages- response rates vary, negative image of junk mail/ spam, databases can be expensive to keep accurate
Merchandising
Influences on the type of promotional methods used
Merchandising = point of sale displays and products with the brand image on websites, banners and pop ups
- business objectives, available budget, target audience, customer expectations, brand image + type of products sold, competitions methods, legislation (cigarette companies + fast food)
PEOPLE
PROCESS
The staff a company hires, who come into contact with customers
- major impact on customer service quality and therefore brand image and customer loyalty
- impacted by the firms human resource policies (recruitment, training, motivation)
How the company deals with its customers and delivers the product or service
- covers areas such as communication, how the customer is dealt with, how effectively needs are satisfied, after sales service etc.
PHYSICAL ENVIRONMENT
The tangible features of the service that can enhance customer experience
- the building the company operates in
- store layout and displays
- websites, catalogues, brochures, letters, emails
- equipment used
- staff appearance and uniforms
Packaging
PRODUCT
A product is anything that is capable of satisfying customer needs
(+link to Boston Matrix- card 11)
Product life cycle - development, introduction, growth, maturity and decline
Development– Product is not on the market yet. Research and development and testing take place. Prototypes are built and modified before a product is ready for launch. No sales are made. Development costs will need to be recovered later.
Introduction– Product is launched on the market. Advertising costs will be high in order for the product to get noticed.
Growth– Sales begin to rise. Advertising costs are still high. A profit may be made, if all research and development and advertising costs have been recouped.
Maturity– Sales are at their peak. Advertising can be reduced as product is now well known.
Decline– Sales begin to fall.
Product extension strategies
+context examples
+ why a firm might use them?
Extending the product life cycle involves lowering the price, changing the promotion for a new promotional message, changing the product through styling and improvement, look for alternative distribution channels, develop a new market segment, by new uses for the product, reposition the product
(Vics using a blob as a steamer in hot water. Nutella ella found new uses for its product and Lucozade repositioned itself from a sport to a soft drink.)
extension strategy to maintain market share, make more money by spending little on marketing the product, weeded out product variations, promotion to retain loyal customers
PRICE
+ factors considered when setting a price
How much are firm charges for its product?
Impacted by competitors products and prices, cost of production promotion et cetera, market conditions, bargaining power of customers in the target market, location of the business, brand image, product quality and packaging, price elasticity of demand
Pricing strategies
Penetration pricing is a strategy where a company initially sets a low price for a new product or service to quickly gain market share and attract customers.
Price skimming where a company initially sets a high price for a new product, then gradually lowers it over time. This strategy is often used to maximize profits by targeting early adopters who are willing to pay a premium for a novel product
, price leadership refers to a pricing strategy where one dominant firm in an industry sets prices, and other firms follow suit. This often occurs in oligopolistic markets where a few large companies control a significant portion of the market.
Predator (destroyer) pricing is a business strategy where a company sells products or services at prices below production costs to drive out competitors, aiming to later raise prices and increase profits once the market is controlled
Each company is either a
price taker ( have no choice but to charge the ruling market price)
a price maker able to fix their own price a
price leader market leaders who price whose price changes are followed by rivals particularly true for competitive environment such as supermarkets and
price followers who follow the price changing lead of the market leaders
Other pricing strategies
Premium pricing Premium pricing involves setting the price of a product or service higher than its competitors to create a perception of superior quality, exclusivity, or status.
Seasonal pricing adjusts product or service prices based on predictable changes in demand throughout the year, aiming to maximize revenue during peak periods and maintain customer interest during quieter times.
Loss leaders - A short-term tactic where firms set lower prices than usual to attract customers who they hope will buy other full-priced products. Very , common in supermarkets, mobile phone contracts where the handset is free and mobile games where the game is free but you then have in-app purchase
Psychological pricing - Prices are set to appear lower to the consumer, for example, products sold for £9.99 or not including add-on fees such as only advertising the entrance fee for paintballing but not the cost of paintballs nee to play.
Price discrimination - Higher price are charged to some customers for the same product/service, for example, taxis, train fares.
Cost-plus pricing - The average cost of producing a product plus a sum to ensure profit is made.
Mark up - The percentage added to a product to ensure a profit is made.
Dynamic pricing is where the price of a good/service is altered with a change in demand particularly used in taxi services
PLACE
Define producer/manufacturer
wholesaler
retailer
and agent
Also known as distribution, meaning how the product gets from the producer to the consumer through distribution channels
A producer/manufacturer is the company that makes the product
A wholesaler is a business that buys products in bulk from the manufacturer and then sells them on in small quantities
A retailer is a business that sells smaller quantities of products directly to consumers. They can either buy products from the manufacturer or from a wholesaler.
An agent is an individual company that acts on behalf of a producer or manufacturer to facilitate sales by connecting with buyers typically earns commission and negotiate deal and arranged transactions without ever taking ownership of the product
Define channels of distribution and intermediaries
Channels of distribution are all the organisations through which a product must pass between its point of production and consumption
Intermediaries are a personal company that acts as a link between people in order to try and bring about an agreement for example example wholesalers retail is an agents
(used for efficiency their specialist knowledge contacts and experience scale of operation)
Examples of channels of distribution are
manufactured to retailer to consumer
manufacture to wholesaler to retailer to consumer
manufacture to consumer
manufacturer to agent to consumer
Methods of distribution
Influences on the type of distribution method used by a business
Direct to the consumer through websites, catalogues, representatives and sales teams, vending machines telesales,
using retailers, using wholesalers, using agents
Dependent on the nature of the product (if it’s perishable/fragile and it’s desired image)
the market (if sales are made on a global scale, competition)
The business (what it can afford it’s established distribution network and the extensive desired control)
legal issues (limitations on sale risk if an intermediary sales to an inappropriate customer)
Multi channel distribution
+ advantages and disadvantages
Distribution involves a business using more than one type of distribution channel for example Apple which uses its own retail stores online stores and multiple retail partners
Advantages are that it allows more target market segments to be reached, customers and increasingly expect products to be available. There are more than one channel, and enable higher revenue.
The disadvantages are that there is a potential for channel conflict for example competing with retailers by also selling direct, can be complex to manage, danger that writing strategies become confused in the eyes of the customers
Social media and viral marketing
Using social media to promote products and services and connect with audiences also using targeted algorithms
Can improve in humanise your brand by engaging the audience and can impact sales through conversion rates. It also allows you to directly study the competition.
Viral marketing holds great risk for example if a wrong or inaccurate message is spread and how this can impact your brand image
This can be out of your control for example McDonald’s being one of the last few companies to attract from Russia after the Ukraine war and Tesla losing sales after Elon Musk makes political statements
