Unit 3: Marketing Flashcards
1
Q
What is marketing?
A
Choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value.
2
Q
Why is marketing mutually beneficial?
A
Business makes a profit and consumer experiences good value for money
3
Q
What are some insights provided by effective market research?
A
Dimensions of the market, competitor strategies, expectations of customers and market segments
4
Q
What do marketing objectives concern?
A
Market share, market size and growth, corporate objectives, brand awareness, marketing mix and competition
5
Q
What is the value of setting marketing objectives?
A
- Ensure functional activities consistent with corporate objectives
- Provides a focus
- Provides a measure of success or failure
- Establish priorities for marketing resources and effort
6
Q
What are potential problems with setting marketing objectives?
A
- Fast changing external environment
- Potential conflict between objectives
- Easily too ambitious
7
Q
What are internal influences on marketing objectives?
A
Corporate objectives, finance, human resources, operational issues, business culture
8
Q
What are external influences on marketing objectives?
A
Economic environment, competitor actions, market dynamics, technological change, social, political change
9
Q
What is used for extrapolation, to smooth out fluctuations?
A
Moving averages
10
Q
What is extrapolation?
A
It uses trends established from historical data to forecast the future
11
Q
What is a confidence interval?
A
The percentage probability that an estimated range of possible values in fact includes the actual value being estimated
12
Q
What types of business activity may contain confidence intervals?
A
Quality management, market research, risk management, budgeting
13
Q
What is market segmentation?
A
It involves dividing a market into different subsets that reflect different customer characteristics
14
Q
What are the categories of segmentation?
A
Demographic, geographic, income and behavioural
15
Q
What is the difference between mass markets and niche markets?
A
Mass is where a business sells to the largest part of the market, whereas niche is more specific for certain customers
16
Q
What are the advantages of mass marketing?
A
- High revenues
- Large scale production
- Expensive marketing eliminates smaller rivals
- High brand awareness
- High funding for research and development
17
Q
What are the disadvantages of mass marketing?
A
- Less scope for added value
- High fixed capital costs
- Effects of standardisation
- Vulnerable to changes in demand
- Vulnerable to low cost competition from abroad
18
Q
What are the advantages of niche marketing?
A
- Can cater to specific needs of the customer
- Can promote to customers specifically
- Less competition in smaller markets
- Limited demand may suit the owner
19
Q
What are the disadvantages of niche marketing?
A
- Lower profits
- Can be vulnerable to larger firms
- As businesses are more specialised can be vulnerable to changes in demand
20
Q
What is a target market?
A
The set of customers sharing common needs and wants that a business decides to target
21
Q
What are the three strategies for targeting a market?
A
Undifferentiated, differentiated and concentrated
22
Q
What is the market position also known as?
A
Value proposition
23
Q
What does a market map illustrate?
A
The range of positions that a product can take in a market based on two dimensions that are important to consumers
24
Q
What are the advantages of market mapping?
A
- Helps spot gaps
- Useful for analysing competitors
- Encourgaes use of market research
25
What are the disadvantages of market mapping?
- Not a guarantee
- Unreliability of research
- May be reasons for gaps
26
What is the marketing mix?
The combination of elements used by a business to enable it to meet the needs and expectations of customers
27
What are the seven Ps of the marketing mix?
Product, price, place, promotion, people, process, physical environment
28
What are the layers of a product?
Core value (purpose of the product), actual product (benefits to the product e.g.design, brand, packaging), augmented product (additional factors e.g. warranty, after sale service)
29
What are the stages of the product life cycle?
Research and development, introduction, growth, maturity, extension/decline
30
What is the Boston Matrix?
It classifies a product into four specific categories, so decisions can be made on moving them forward
31
What are the stages of the Boston Matrix?
Star- very profitable but require investment
Cash cow- little growth, development costs are low
Problem child- growing rapidly, competition is strong
Dog- in decline, will be phased out
32
What are the four views on price?
Economist's, accountant's, customer's, marketer's
33
What are pricing strategies?
Medium to long term goals that are used to achieve marketing objectives
34
What are pricing tactics?
Short term goals used to suit particular situations
35
What is price skimming?
High pricing to maximise profit at introduction
36
Which pricing strategy is based on a low introductory price to gain market share?
Penetration pricing
37
What is premium pricing?
High pricing to enhance a luxury image
38
What are price leaders and followers?
Followers attempt to match the dominant seller
39
Which pricing strategy is where a product sells below normal/market price for a short period to compete with other businesses or potential entrants?
Preemptive pricing
40
What is price discrimination?
Charging different prices to different market segments e.g. students, OAP, peak/off peak
41
What is predatory pricing tactic?
Removing a rival by dropping prices
42
What is price war tactic?
Lower prices to undercut competition
43
What is selling products at the back of the shop at a low price, to attract as they go through the shop?
Loss leaders
44
What is an example of psychological pricing tactics?
Charging at 99p rather than £1`
45
What is dynamic pricing?
Flexible prices based on market conditions
46
What does elasticity measure?
The responsiveness of demand to a change in a relevant variable, such as price or income
47
What is demand?
The number of people who are willing to consume a product
48
What measures the extent to which the quantity of a product demanded changes in response to a change in price?
Price elasticity of demand
49
What will PED always be?
Negative
50
What does PED have to be between for demand to be inelastic?
0 and -1
51
What elasticity is when PED is -1?
Unit elastic
52
What does PED have to be for demand to be elastic?
Less than -1
53
What are factors influencing PED?
Brand strength, necessity, habits, availability of substitutes, time
54
What does income elasticity of demand measure?
The extent to which the quantity of a product demanded is affected by a change in income
55
What are limitations of calculating and using elastics?
- Can be difficult to get reliable data
- Other factors that demand (e.g. customer tastes)
- Many markets subject to rapid technological change - make previous data less reliable
- Competitors will react, pricing isn't in isolation
56
For a typical Fortune 500 company, what additional net income would a 10% increase in data accessibility result?
$65 million
57
What is the main aim of promotion?
To ensure that customers are aware of the existence and positioning of products or services
58
What does AIDA stand for in terms of promotion?
Awareness, Interest, Decision, Action
59
What is the promotional mix?
The specific mix of promotional methods that a business uses to pursue its marketing objectives
60
What are the main elements of the mix?
- Advertising
- Sales promotion & merchandising
- Personal selling
- PR
- Direct marketing
- Trade shows
- Online marketing
61
What are advantages of advertising?
Wide coverage, control of message, repetition is effective, effective for building brand awareness
62
What are disadvantages of advertising?
Often expensive, impersonal, one way communication, lacks flexibility, limited ability to close sale
63
What are advantages of personal selling?
High customer attention, message is customised, adaptable, persuasive impact, opportunity to close sale
64
What are disadvantages of personal selling?
High cost, labour intensive, can only reach a limited number of customers
65
What are advantages of sales promotion?
Effective at achieving a quick boost to sales, encourages customers to trial a product or switch brands
66
What are disadvantages of sales promotion?
Short term effect, customers may expect further promotions, may damage brand image
67
What does PR aim to do?
Build the image and reputation of the business and its products, particularly amongst customers
68
What is sponsorship?
It takes places when a payment for an event, person, organisation is given in return some benefit, common in arts and sports
69
What are advantages of direct marketing?
Focus limited resources on targeted promotion, can personalise, relatively easy to measure response, cost effective
70
What are disadvantages of direct marketing?
Response rates vary enormously, negative image of junk mail, databases expensive to maintain and keep accurate
71
What is informative marketing used for?
To create awareness of the product whilst also educating thee market on the features and benefits of the products
72
What is persuasive promotion?
A method of promotion used to change a buyer's attitude to convince them to purchase, explaining how the product is better or different to the competition
73
What is above the line promotion?
Paid for communication using traditional more expensive forms of media, for the mass market
74
What promotion type is where the business has direct control over the target audience, more localised?
Below the line promotion
75
What is promotional merchandising?
Putting branding on products since it is less expensive and ensures longer exposure of a particular brand
76
What are factors influencing promotion?
- Stages in the product's life cycle
- Nature of the product
- Competition
- Marketing objectives & budget
- Target market
77
What are types of brands?
Product brand, service brand, umbrella ('family') brand, corporate & own label brand, global brand
78
What are service brands?
Brands that add perceived value to services, either delivered face to face or via apps
79
What are examples of fast moving consumer goods brands?
Vaseline, Persil and Marmite
80
Which brand is Cadbury an example of?
Umbrella brands
81
What does corporate branding refer to?
The practice of promoting the brand name of a corporate entity, as opposed to the specific products or services, e.g. Lego
82
What are global brands also known as?
Household names
83
What are key benefits of effective branding?
Adds significant value, builds customer loyalty, able to charge higher prices
84
What is distribution used for?
To make products available in the right place at the right time in the right quantities
85
What is a distribution channel?
It moves a product through the stages from production to final consumption
86
What are purposes of distribution channels?
- Provide a link between production and consumption
- Helps gather market information
- Communicates promotional offers
- Finds and communicates with prospective buyers
- Physical distribution
- Financing
- Risk taking
87
What are intermediaries?
The independent groups or organisations within the channel that make the product available for consumption, for example: retailer, wholesaler, distributor, agent
88
What are direct distribution channels?
Where a producer and consumer deal directly with each other (doesn't involve intermediaries)
89
What are reasons for using intermediaries?
- Geography
- Consolidation of small orders into large ones
- Better use of resources elsewhere
- Lack of retailing experience/expertise
- Segmentation (different market segments can be best reached by different distribution channels)
90
What does multi-channel distribution involve?
Business using more than one type of distribution channel
91
What are benefits of multi-channel distribution?
- Allows more target market segments to be reached
- Customers increasingly expect products to be available via more than one channel
- Enables higher revenues, e.g. if retail outlets have no stock but customers can buy online
92
What are drawbacks of multi-channel distribution?
- Potential for channel 'conflict' e.g. competing with retailers by also selling direct
- Can be complex to manage
- Danger that pricing strategy becomes confused
93
What are factors to consider when choosing a distribution channel?
- Nature of the product
- The market
- The business
94
What must the marketing mix take account of?
- Position in the PLC
- Boston Matrix
- Type of product
- Marketing objectives
- Target market
- Competition
- Positioning
