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Business > Unit 3: Marketing > Flashcards

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.

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2
Q

Why is marketing mutually beneficial?

A

Business makes a profit and consumer experiences good value for money

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3
Q

What are some insights provided by effective market research?

A

Dimensions of the market, competitor strategies, expectations of customers and market segments

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4
Q

What do marketing objectives concern?

A

Market share, market size and growth, corporate objectives, brand awareness, marketing mix and competition

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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
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6
Q

What are potential problems with setting marketing objectives?

A
  • Fast changing external environment
  • Potential conflict between objectives
  • Easily too ambitious
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7
Q

What are internal influences on marketing objectives?

A

Corporate objectives, finance, human resources, operational issues, business culture

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8
Q

What are external influences on marketing objectives?

A

Economic environment, competitor actions, market dynamics, technological change, social, political change

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9
Q

What is used for extrapolation, to smooth out fluctuations?

A

Moving averages

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10
Q

What is extrapolation?

A

It uses trends established from historical data to forecast the future

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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

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12
Q

What types of business activity may contain confidence intervals?

A

Quality management, market research, risk management, budgeting

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13
Q

What is market segmentation?

A

It involves dividing a market into different subsets that reflect different customer characteristics

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14
Q

What are the categories of segmentation?

A

Demographic, geographic, income and behavioural

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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

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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
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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
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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
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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
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20
Q

What is a target market?

A

The set of customers sharing common needs and wants that a business decides to target

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21
Q

What are the three strategies for targeting a market?

A

Undifferentiated, differentiated and concentrated

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22
Q

What is the market position also known as?

A

Value proposition

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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

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24
Q

What are the advantages of market mapping?

A
  • Helps spot gaps
  • Useful for analysing competitors
  • Encourgaes use of market research
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25
Q

What are the disadvantages of market mapping?

A
  • Not a guarantee
  • Unreliability of research
  • May be reasons for gaps
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26
Q

What is the marketing mix?

A

The combination of elements used by a business to enable it to meet the needs and expectations of customers

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27
Q

What are the seven Ps of the marketing mix?

A

Product, price, place, promotion, people, process, physical environment

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28
Q

What are the layers of a product?

A

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)

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29
Q

What are the stages of the product life cycle?

A

Research and development, introduction, growth, maturity, extension/decline

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30
Q

What is the Boston Matrix?

A

It classifies a product into four specific categories, so decisions can be made on moving them forward

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31
Q

What are the stages of the Boston Matrix?

A

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

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32
Q

What are the four views on price?

A

Economist’s, accountant’s, customer’s, marketer’s

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33
Q

What are pricing strategies?

A

Medium to long term goals that are used to achieve marketing objectives

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34
Q

What are pricing tactics?

A

Short term goals used to suit particular situations

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35
Q

What is price skimming?

A

High pricing to maximise profit at introduction

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36
Q

Which pricing strategy is based on a low introductory price to gain market share?

A

Penetration pricing

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37
Q

What is premium pricing?

A

High pricing to enhance a luxury image

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38
Q

What are price leaders and followers?

A

Followers attempt to match the dominant seller

39
Q

Which pricing strategy is where a product sells below normal/market price for a short period to compete with other businesses or potential entrants?

A

Preemptive pricing

40
Q

What is price discrimination?

A

Charging different prices to different market segments e.g. students, OAP, peak/off peak

41
Q

What is predatory pricing tactic?

A

Removing a rival by dropping prices

42
Q

What is price war tactic?

A

Lower prices to undercut competition

43
Q

What is selling products at the back of the shop at a low price, to attract as they go through the shop?

A

Loss leaders

44
Q

What is an example of psychological pricing tactics?

A

Charging at 99p rather than £1`

45
Q

What is dynamic pricing?

A

Flexible prices based on market conditions

46
Q

What does elasticity measure?

A

The responsiveness of demand to a change in a relevant variable, such as price or income

47
Q

What is demand?

A

The number of people who are willing to consume a product

48
Q

What measures the extent to which the quantity of a product demanded changes in response to a change in price?

A

Price elasticity of demand

49
Q

What will PED always be?

A

Negative

50
Q

What does PED have to be between for demand to be inelastic?

A

0 and -1

51
Q

What elasticity is when PED is -1?

A

Unit elastic

52
Q

What does PED have to be for demand to be elastic?

A

Less than -1

53
Q

What are factors influencing PED?

A

Brand strength, necessity, habits, availability of substitutes, time

54
Q

What does income elasticity of demand measure?

A

The extent to which the quantity of a product demanded is affected by a change in income

55
Q

What are limitations of calculating and using elastics?

A
  • 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
Q

For a typical Fortune 500 company, what additional net income would a 10% increase in data accessibility result?

A

$65 million

57
Q

What is the main aim of promotion?

A

To ensure that customers are aware of the existence and positioning of products or services

58
Q

What does AIDA stand for in terms of promotion?

A

Awareness, Interest, Decision, Action

59
Q

What is the promotional mix?

A

The specific mix of promotional methods that a business uses to pursue its marketing objectives

60
Q

What are the main elements of the mix?

A
  • Advertising
  • Sales promotion & merchandising
  • Personal selling
  • PR
  • Direct marketing
  • Trade shows
  • Online marketing
61
Q

What are advantages of advertising?

A

Wide coverage, control of message, repetition is effective, effective for building brand awareness

62
Q

What are disadvantages of advertising?

A

Often expensive, impersonal, one way communication, lacks flexibility, limited ability to close sale

63
Q

What are advantages of personal selling?

A

High customer attention, message is customised, adaptable, persuasive impact, opportunity to close sale

64
Q

What are disadvantages of personal selling?

A

High cost, labour intensive, can only reach a limited number of customers

65
Q

What are advantages of sales promotion?

A

Effective at achieving a quick boost to sales, encourages customers to trial a product or switch brands

66
Q

What are disadvantages of sales promotion?

A

Short term effect, customers may expect further promotions, may damage brand image

67
Q

What does PR aim to do?

A

Build the image and reputation of the business and its products, particularly amongst customers

68
Q

What is sponsorship?

A

It takes places when a payment for an event, person, organisation is given in return some benefit, common in arts and sports

69
Q

What are advantages of direct marketing?

A

Focus limited resources on targeted promotion, can personalise, relatively easy to measure response, cost effective

70
Q

What are disadvantages of direct marketing?

A

Response rates vary enormously, negative image of junk mail, databases expensive to maintain and keep accurate

71
Q

What is informative marketing used for?

A

To create awareness of the product whilst also educating thee market on the features and benefits of the products

72
Q

What is persuasive promotion?

A

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
Q

What is above the line promotion?

A

Paid for communication using traditional more expensive forms of media, for the mass market

74
Q

What promotion type is where the business has direct control over the target audience, more localised?

A

Below the line promotion

75
Q

What is promotional merchandising?

A

Putting branding on products since it is less expensive and ensures longer exposure of a particular brand

76
Q

What are factors influencing promotion?

A
  • Stages in the product’s life cycle
  • Nature of the product
  • Competition
  • Marketing objectives & budget
  • Target market
77
Q

What are types of brands?

A

Product brand, service brand, umbrella (‘family’) brand, corporate & own label brand, global brand

78
Q

What are service brands?

A

Brands that add perceived value to services, either delivered face to face or via apps

79
Q

What are examples of fast moving consumer goods brands?

A

Vaseline, Persil and Marmite

80
Q

Which brand is Cadbury an example of?

A

Umbrella brands

81
Q

What does corporate branding refer to?

A

The practice of promoting the brand name of a corporate entity, as opposed to the specific products or services, e.g. Lego

82
Q

What are global brands also known as?

A

Household names

83
Q

What are key benefits of effective branding?

A

Adds significant value, builds customer loyalty, able to charge higher prices

84
Q

What is distribution used for?

A

To make products available in the right place at the right time in the right quantities

85
Q

What is a distribution channel?

A

It moves a product through the stages from production to final consumption

86
Q

What are purposes of distribution channels?

A
  • 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
Q

What are intermediaries?

A

The independent groups or organisations within the channel that make the product available for consumption, for example: retailer, wholesaler, distributor, agent

88
Q

What are direct distribution channels?

A

Where a producer and consumer deal directly with each other (doesn’t involve intermediaries)

89
Q

What are reasons for using intermediaries?

A
  • 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
Q

What does multi-channel distribution involve?

A

Business using more than one type of distribution channel

91
Q

What are benefits of multi-channel distribution?

A
  • 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
Q

What are drawbacks of multi-channel distribution?

A
  • 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
Q

What are factors to consider when choosing a distribution channel?

A
  • Nature of the product
  • The market
  • The business
94
Q

What must the marketing mix take account of?

A
  • Position in the PLC
  • Boston Matrix
  • Type of product
  • Marketing objectives
  • Target market
  • Competition
  • Positioning

Business (7 decks)

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