Unit 3 pt2 Flashcards
What is market segmentation
Dividing the market into different groups(segments)in which customers share common characteristics
What are some pros of market segmentation
Helps understand need of a specific group of customers
Makes marketing more targeted and efficient
Helps differentiate a product or service
Hat are cons of market segmentation
Segment size may be too small to be profitable
Could miss other potential customers
Could prevent customers from trying to buy product if they believe it’s not aimed at them
What is market targeting
Deciding which segments as a business they would like to target and how
Which factors influence target marketing
Nature of product (purpose)
Level of competition
The consumer
What is a mass market
Has products for most people,most things,most of the time
What is a niche market
Targeting a smaller specialist group of customers
What are characteristics of mass market
Not segmented
Widely available
Lots of competition
Mass media used to advertise
What are some pros of mass market
Economies of scale
Helps brand awareness
Large target market = high revenue+high market share
What are cons of mass market
More competition means price competition
Generic products
High levels of initial investment
Higher costs due to product adaptation to segments
What are characteristics of niche market
Less competition
Unsatisfied gaps in the market w
Customer loyalty and repeat purchases
What are cons of niche market
Small market
Low obstacle entry
Small overall profit
What are pros of niche market
Specialisation and differentiation (USP)
Less competition
Change premium price as it meets exact needs
Better profit margins
What are examples of mass market
Nescafé coffee(mass produced product)
Bread
Soap
What are examples of niche market
Viva magic coffee ,includes lions mane mushroom and is organic and ethical
What is market positioning
Where a particular business stands in the market
What is the marketing mix
Combination of marketing activities a business should consider and plan to best meet needs of customers
What affects how the marketing mix changes
Tech
Market research
Nature of products
Finance
What are the 7ps of the marketing mix
Price product place Promotion
People process physical
What is physical
Layout and design of premises,ambience,ease of movement
What is process
Transaction process,design,operational support
What is people
Customer service,skills and experience of staff
What is product
Anything capable of satisfying a customer
Services and physical products
What are consumer products
Brought by final customers for personal consumption
What are industrial products
Brought by other businesses not customers
What is product development
Process of developing new or improving existing products
What are the steps of the product development
Idea screening and evaluation>detailed investigation >developing>testing>market launch
What are internal factors that influence new product development
Talent
Past success/failure
Current products
What are external factors that influence product development
New gap in market
Customers expectations
New technology
Competitor actions
Government policies
What are some extension strategies
Find new segments
Price reduction
Product re design
New packaging
Increase promotions
What are pros of the product lifecycle
Easy to use
Extension strategy
Forecast sales
What are cons of the product lifestyle
Never follow smooth pattern
Identifying which phase the product in may be difficult
Can be misleading and lead to wrong decisions
What is the Boston matrix
A model which helps a business analyse their portfolio
Helps businesses to categorise their products/brands and make more informed decisions
What is the X axis of the Boston’s matrix
Relative market share
What is the Y axis of the Boston matrix
Market growth
Describe the dog part of the Boston matrix
Low market share and growth
enough cash to break even
Usually sold or close
Not worth investment
Describe the question mark part of the Boston matrix
Low market share
High market growth
Need substantial investment
Should they invest?
Describe the cash cow part of the Boston matrix
Low growth products ,high market share
Little investment needed
Managed for continued profit
General strong cash flow
What is the star part of the Boston matrix
High growth products
Strong compared with competition
Heavy investment
Growth will slow Strong compared
What are pros of the Boston matrix
Having a business in all 4 categories reduces risk
Multiple resource streams
Another test for informed decisions
What are cons of the Boston matrix
Only a snapshot(things change)
Some products can be borderline
Doesnt take into consideration environmental factors
Getting share info isn’t easy or accurate
What is price
Amount of money charged by a business for a product or service
What are factors that impact price of a product
Rivals
Desirable and inexpensive
Singular components
Value for money
Unique/USP
Elasticity of demand
What is competitor pricing
Price set in comparison to the competition
What is loss leader
Price set below cost price as a bait to entice customers ,profit comes from other sales
What is predatory pricing
Price set deliberately low by dominant competitor put off competitors
(Illegal in the UK,EV,US)
What is psychological pricing
Price set to make customers think products are cheaper
E.g £9.99 instead of £10
What is price discrimination
Different prices for different groups of customers e.g child ticket,student prices
What is dynamic pricing
Responding to periods of high and low demand which is powered by AI and algorithms
What is cost plus pricing
Adding a percentage to the cost of making a product to arrive at its final selling price
What is distribution
Where to sell the product
How to get the product there
Where can it be accessed or consumed
What is a distribution channel
The number of intermediaries involved in getting the product to customers
What is a direct Channel
Produces > consumer
What is the through modern channel
Producer > retailer > consumer
What is the traditional channel
Producer > wholesaler > retailer > consumer
What are advantages of the direct channel
Quicker for consumers to buy
Control over prices and keep all profits so retailers and wholesalers have no cut
Increase in demand and sales due to low prices
What are disadvantages of the direct channel
Relies on branding
Hard to forecast sales
Huge distribution costs
Low reach so lots of marketing costs
What are advantages of the modern channel
Can sell more in batches
Easier to forecast sales
Good way to overcome marketing costs
Don’t deal with all customer service
Retailers have a large reach
What are disadvantages of the modern channel
Don’t have control of marketing
Less profits you can keep
No control of price
More retailers means higher distribution costs
Won’t receive full price of what customer pays because of retailer margin
What are advantages of the traditional channel
Lots of cash coming in large quantities
More likely for higher sale
Reach higher customer base
Wholesaler buys in bulk so increase in sales
Low distribution cost,low risk and logistic costs
What are disadvantages of the traditional channel
Take longer for customers to get products
Retailer and wholesaler seek a margin
Price increase till final customer so lower sales
Hard to provide effective customer service
What is promotion
Bringing customers attention to a product or service
What is the promotional mix
Combination of methods used to promote a product
What are some ways to advertise
Ads,sale promotions,PR, merch,sponsor
What is marketing
This means understanding and communicating with customers so effectively that they want to buy from the business
What is physical
Layout and design of premises,ambience and ease of movement
What is process
Website design and operational support
What is people
Customer service, skills and experience of staff
