Unit 4.2 maketing planning

Question 1

Consumer profiles

Answer 1

Consumer profiles are the demographic and psychographic characteristics of consumers in different markets, such as their age, gender, occupation or income level.

Question 2

Differentiation

Answer 2

Differentiation is the art of distinguishing a business or its products from rivals in the industry. It tries to create the perception among customers that the organization’s product is different (unique or special) compared to substitute products in the market.

Question 3

Market segmentation

Answer 3

Market segmentation is the process of categorizing customers into distinct groups with similar characteristics (such as age or gender) and similar wants or needs.

Question 4

A marketing audit

Answer 4

A marketing audit is a review of the current position of an organization’s marketing mix, in terms of its strengths and weaknesses and consideration of opportunities and threats.

Question 5

Marketing objectives

Answer 5

Marketing objectives are the targets that the marketing department wishes to achieve, such as sales growth or increased market share.

Question 6

A marketing plan

Answer 6

A marketing plan is a document outlining an organization’s marketing objectives and the marketing strategies to be used to achieve these objectives.

Question 7

Marketing planning

Answer 7

Marketing planning is a systematic process of devising marketing objectives and appropriate marketing strategies to achieve these goals.

Question 8

A market segment

Answer 8

A market segment refers to a distinct group of customers with similar characteristics (such as age or gender) and similar wants or needs.

Question 9

Marketing strategies

Answer 9

Marketing strategies are the various long-term actions taken by a business to achieve its marketing goals.

Question 10

Mass marketing

Answer 10

Mass marketing refers to undifferentiated marketing. This marketing strategy ignores targeting individual market segments.

Question 11

Niche marketing

Answer 11

Niche marketing targets a specific and well-defined market segment, such as high-end speciality goods.

Question 12

A product position map (or perception map)

Answer 12

A product position map (or perception map) is a visual tool that reveals customer perceptions of a product or brand in relation to others in the market, often by comparing perceptions about price and quality.

Question 13

Repositioning

Answer 13

Repositioning is a marketing strategy that involves changing the market’s perception of a firm’s product or brand in comparison to rival businesses.

Question 14

Segmentation

Answer 14

Segmentation is the process of categorising customers into distinct groups of people with similar characteristics and buying habits for market research and targeting purposes. Segmentation can be done by using demographic, geographic and psychographic factors.

Question 15

A target market

Answer 15

A target market refers to a clearly identifiable group of customers that marketers choose to focus their efforts on, such as children, adults, men or women for a particular product.

Question 16

Targeting

Answer 16

Targeting refers to each distinctive market segment having its own specific marketing mix, depending on whether the business operates in niche or mass markets.

Question 17

Unique selling point (or unique selling proposition)

Answer 17

Unique selling point (or unique selling proposition) refers to any aspect of a good or service that makes it stand out (in a positive way) from those offered by competitors.

Question 18

Strategic Marketing Planning factors

Answer 18

• Marketing plans
• Positioning
• Marketing objectives
• Marketing mix
• Targeting
• Marketing ethics
• Segmentation
• Sales forecasting
• Marketing research

Question 19

Advantages of niche marketing

Answer 19

• There is better focus as a specific market segment is targeted. By contrast, mass marketing has no real focus and markets products to all customers.
• As there is less competition, businesses can charge higher prices for their unique or exclusive products. This helps the business to benefit from higher profit margins on its products.
• Businesses become highly specialized in meeting the needs and wants of their niche target market. This can help to deliver first-rate customer service and encourages customer loyalty.

Question 20

Disadvantages of niche marketing

Answer 20

• Niche markets are small which limits the number of potential customers in the market. By contrast, mass markets cater for a much wider customer base.
• Due to the limited market size, businesses operating in niche markets have few, if any, opportunities to exploit economies of scale. Thus, average costs of product tend to be higher.
• Successful and profitable niche markets attract new entrants into the industry.
• The threat of larger firms entering the market might endanger the survival of businesses operating in niche markets.

Question 21

mass market Advantages

Answer 21

• Businesses can gain from huge potential economies of scale by supplying products in mass markets, thereby helping them to cut unit costs and/or raise profit margins.
• There is no need to modify marketing strategies for different market segments as the whole market can be targeted with a single marketing campaign. This saves both time and resources.
• Catering for larger (mass) markets means that the business can establish a larger customer base, thereby earning higher sales revenues and more profits.

Question 22

Disadvantages of Mass marketing

Answer 22

• Mass marketing is not suitable for all businesses due to the high barriers to entry required for mass production, such as high set- up costs.
• Competition can become quite fierce as customers must be persuaded to buy the firm’s products rather than to buy from a competitor. Thus, marketing budgets must be substantial to remain competitive.
• As there is a lack of focus, mass marketing can be quite wasteful, as specific consumer groups are not being directly targeted.

Question 23

Advantages of differentiation

Answer 23

• Price advantages - Firms can only charge relatively low prices for mass produced and standardized products as customers have other substitute suppliers to choose from. By contrast, differentiation can add value to a firm’s goods and services, thus allowing it to charge higher prices.
• Brand recognition and brand loyalty - These can be a source of competitive advantage. High brand awareness creates more opportunities for products to be sold, perhaps due to customer loyalty or simply because customers feel more comfortable buying a familiar and trusted brand.
• Distribution advantages - Retail space is limited, so vendors such as supermarkets and convenience stores only stock the best- selling brands. Therefore, successful product differentiation improves placement (distribution) of a firm’s products.

Question 24

Disadvantages of differentiation

Answer 24

• Differentiation can be very expensive - For example, special sales promotions can be highly expensive. Only large companies have the financial resources to differentiate their goods and services in order to target a larger number of customers in different market segments.
• Economies of scale - Cost savings cannot be fully exploited compared to mass production of a single, standardized product.
• Differentiation requires additional marketing costs, especially if the business caters for different customers in different markets.
• Choice is not always desirable - Excessive differentiation can drain a firm’s resources and confuse customers, such as the pricing options used by mobile phone service providers or different levels of coverage provided by insurance companies.