Unit 3.1 Marketing Flashcards
What is qualitative data
Data about opinions, judgments and attitudes
What is a survey
Research involving asking questions of people and organisations
What is marketing
The process by which a business satisfies the needs and wants of customers profitably
What is market research
It is a way to enable a business to learn about customer needs and wants and how a market currently meets those needs and wants
What ways can a market change
- customer taste
- kids toys e.g new movies out
- competitor behaviour
- the social and legal environment
- the economic climate
- technology
Why do we need market research
It finds out what the customer wants through primary research
It reduces the risk of failure as the business can base their prices and products on the research
You can understand current customer needs through things like focus groups
What is the market research process (6 steps)
- indentifiy objectives
- decide research method
- design the method e.g questionnaire
- carry it out with chosen group
- analyse the results
- react to the results
What are the five different types of surveys
Postal survey (mailed out) Newspaper survey (inside newspaper) Telephone survey (ask them) Personal interviews (ask in depth questions) Consumer panels (different market segments and ask)
What is a sample
A group that is intended to represent a whole population when talking to everyone in the target population would be too expensive and take too long
What are the pros and cons of a random sample
Equal chance of anyone people picked but may select those not in target group so size would need to be large to be fully representative and it’s expensive
What is quota sampling and its pros and cons
Done by market segment. It’s not random and a selective editing segment is interviewed so it might not be fully representative but is cheaper
What is stratified random sampling and the pros and cons
Samples on the basis of a representative strata or segment. It is still random but more focuses so more relevant informative and could be more cost effective
How does market research help make decisions
You can identify any problems with the marketing mix and can adapt and withdraw products if it is needed
What is a product trail
The way a business persuades a customer to try its product or services for the first time
What are the different ways of product trail
Free trail Consumer panel Free samples Advertising Trial price Money off
What are the advantages of a free trial for the customer
Free
Chance to test product quality
Usually easy to obtain
No obligation to continue buying
What are the advantages of free trial for the business
Adds contact detail of potential customers to the marketing system
A way to obtain feedback
Customer inertia - once the have tried it they are likely to stick with it
Beside product trial what are the four other ways of encouraging trial
Penetration pricing
Public relations
User testing
Advertising
How does penetration pricing work
Introducing a new product at a lower price than competitors so gains market share quickly and builds customer usage and loyalty. Raised again once target market share is reached
How does public relations work
Activities that create goodwill towards an individual business, cause or product e.g viral marketing
What is viral marketing
A way of spreading promotional messages from person to person done by creating content that is begging to be shared like a funny video
What are the main aims of product trial
Favourable publicity
Build an image and reputation
To communicate effective with customers and stakeholders
What is user testing
Potential customers are encouraged to test an early version of a new product or try the real thing as part of the buying process e.g shoes and cars
What is advertising
Various methods of paid for promotion designed to encourage, persuade and inform potential customers e.g TV or billboard
What are the advantages of advertising
Wide coverage
Business controls message
Can be used to build loyalty
What are the disadvantages of advertising
Expensive
Impersonal
One way communication
What is a repeat purchase
When s customer buys a product more than once
How is repeat purchase valuable
Less needed to spend on promotion
Satisfied customers pass on news of positive experience
Demand for product becomes more predictable
Retreat customers tend to buy more than first time ones
How do you promote customer loyalty
Loyalty schemes
Customer relationship management
How do loyalty schemes work
Several ways to reward customer loyalty and provide rewards based on repeat customer, how much they spend in total, orders for large quantities, prompt payment and length of relationship
How does customer relationship management work
System that keeps a business in touch with its repeat customers e.g saving emails this builds a strong relationship with customer to reduce marketing costs and improve market research
What is the product life cycle
A theory which describes the stages a product goes through
What are the five stages in a product life cycle
Introduction stage Growth Maturity/ saturation Decline Extension strategy
Explain the introduction stage of the product life cycle
New product launched with a low level of sales.
It has high unit costs so cash is going out of the business and distributions may be reluctant to stock the product.
Needs heavy promotion so expensive.
Explain the growth stage of the product life cycle
Market expanding but arrival of competitors.
Fast growing sales and easier to get distribution as product gains market acceptance.
Cash flow may be positive.
Market grows and profits rise but new competitors.
Explain the maturity stage of the product life cycle
Slower sales growth as rivals enter the competition, intense competition.
High profit for those with high market share.
Cash flow should be strongly positive.
Weak competitors leave the market.
Explain the decline stage of the product life cycle
The product loses popularity so falling sales.
More competitors leave the market.
Customers moved onto better products.
Profit and cash flow fall.
Explain the extension strategy of the product life cycle
Used to increase the life of a product and prevent it from falling into decline
What are the axis of the product life cycle graph
Sales |
Time -
Ways a business could extend the life of its product
Widen product range - larger target market
Find new markets - less competition but smaller market also could alienate existing market
Special promotions - more affordable to existing customers but could make less profit
Extra advertising - more people aware of product but expensive
Find new uses - widen market but could already be a competitive market
Change appearance/ packaging - refresh and appeal to different markets but expensive to manufacture and time consuming also customers may not like or recognise it
What is a brand
A named product which in the eyes of a consumer is seen to be different from other similar products
What is a generic product
One made by a number of different businesses which is hard for consumers to recognise any differences between the product of one business compared to the product of another e.g coal
What is an own brand product
Something manufactured under the name of a shop, chain or other retailer rather than the name of a company that manufactured e.g Sainsburys basic
What does branding allow businesses to do
Charge a premium price which is above the average for products of a particular type. The business can use the brands USP to increase the sales.
What does branding products do to the consumer
- guarantees the next one bought will be virtually the same
- encourages repeat purchase through brand loyalty
- helps business differentiate
What are the ways to differentiate a product
Design- make it look different
Function - making it do unique things other businesses don’t have
Brand name - reputation for quality
Packaging - easy and convenient is better. People recognise
Range - collection of similar products but can spread risk
What is quantitative data
Data that can be expressed as numbers and can be statistically analysed
What is differentiation
The distinctiveness of the product being offered as perceived by the customers in the market
Three Simplified ways to differentiate a product
Distinctive design
Branding
Performance
What is price in the marketing mix
How much the business charges for a product or service
What is product in the marketing mix
The goods/ services the business offers. Range and quality and the features, benefits and functions
What is place in the marketing mix
The location where the business is situated and where
Your products are available from
What is promotion in the marketing mix
Different ways and methods as to how people find out about the business and methods used to communicate with customer
What is the Boston matrix used for
A tool of portfolio analysis
What is a portfolio
The collecting of businesses or products that make up a business
What are the axis of the matrix
Relative market share – a measure of the firms products strength in the market
Market growth ||| a measure of market attractiveness
What is a star product
One that is very popular with lots of people, has lots of competition and high level of profit
Market share = high
Market growth = high
Profit = high
What is a cash cow
A product that has been around for many years and is well known that can help fund investments in star and problem children.
Market share = high
Market growth = low
profit = high
What is a question mark/ problem child
A new product on the market and could become a dog or a star
Market share = low
Market growth = high
Profit = high
What is a dog
The product doesn’t make much profit and may be unpopular they may have failed or be in the decline stage of product life cycle
Market share = low
Market growth = low
Profit = zero
What is the positioning of the four components in the Boston matrix
Market Question marks | stars
Growth ————————-
^ high Dogs | cash cows
Relative market share -> high.
