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Business > Unit 3-Decision making to improve marketing performance (3.1, 3.2 and 3.3) > Flashcards

Unit 3-Decision making to improve marketing performance (3.1, 3.2 and 3.3) Flashcards

1
Q

Define marketing.

A

The management process responsible for identifying, anticipating and satisfying customer requirements profitably.

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2
Q

What does the Chartered Institute of Marketing (CIM) define marketing as?

A

More than just advertising

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3
Q

Give the 1st 4 examples of what range of activities marketing involves.

A
  1. Market research
  2. Setting prices
  3. Designing and using promotion methods, including advertising
  4. Designing the product and packaging
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3
Q

Give the 1st 4 examples of what range of activities marketing involves.

A
  1. Market research
  2. Setting prices
  3. Designing and using promotion methods, including advertising
  4. Designing the product and packaging
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4
Q

Give the 2nd 4 examples of what range of activities marketing involves.

A
  1. Deciding where to sell the goods/services
  2. Managing distribution channels
  3. Customer service and communicating with customers
  4. The method of selling the good/service
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5
Q

As described in the definition of marketing, what are the 3 main purposes of marketing?

A
  1. Anticipating consumers’ wants
  2. Satisfying customers’ wants
  3. Meeting the needs of the business
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6
Q

How can you anticipate consumer wants?

A

Through carrying out market research to discover what the customer wants and what might make them purchase the good/service

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7
Q

What can anticipating consumer wants be used for?

A

Analysing the market the firm intends to enter, including:
Market size
Number of rivals
Current trends
Average prices charged
To know how to best deal with them when designing their strategy

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8
Q

How can a business satisfy customer wants?

A

Design a marketing strategy to attract customers and build a company brand and reputation.

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9
Q

How will the business design a marketing strategy?

A

Use a range of variables known as the marketing mix (the ‘Seven Ps’) to do this.

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10
Q

How does marketing need to help meet the needs of the business?

A

Marketing should help ensure a firm achieves its aims and objectives.

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11
Q

What are some examples of aims and objectives marketing should help a firm achieve?

A

Survival
Sales growth
Market share gains
Profit maximisation
Social responsibility and ethics

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12
Q

Define the term ‘marketing objectives’.

A

Specific goals/targets of the marketing department

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13
Q

What must marketing objectives be in line with?

A

Firm’s overall corporate objectives

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14
Q

Why must businesses set marketing objectives?

A

To determine what they must do in their marketing strategy to help achieve their overall company objectives.

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15
Q

Give some examples of marketing objectives a firm may set.

A

Increase sales volume and sales value
Brand image and awareness
Market and sales growth
Increase market share
Build brand loyalty

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16
Q

Define ‘market size’.

A

Total volume of sales of a product or the value of sales of a product.

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17
Q

What does sales volume measure?

A

Number of items sold or produced.

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18
Q

What does sales value measure?

A

The financial worth of the items sold.

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19
Q

Why may firms set objectives or targets to maximise their sales volume or volume?

A

To simply maintain what they have, particularly in difficult times.

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20
Q

How can businesses increase marketing size?

A

Either convince consumers to:
Buy more goods/services
Pay more for the same good/service

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21
Q

What will having a large marketing size attract?

A

Many competitors

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22
Q

Why do many firms choose to operate in smaller niche markets?

A

Mass markets have many competitors.

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23
Q

Give an example of a firm choosing to operate in a niche market.

A

Hornby operating in the model railway business rather than other larger mass appeal toy markets.

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24
Q

Give the 1st set of additional 4 marketing objectives.

A
  1. Increase size
  2. Market positioning
  3. Security/survival
  4. Successfully launch a new product or end unsuccessful products.
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25
Q

Give the 2nd set of additional 4 marketing objectives.

A
  1. Increase product awareness
  2. Innovation and developing new products
  3. Differentiation
  4. Add value to existing products
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26
Q

Give some examples of how a business can increase size.

A

Increase:
Sales revenue
Market share
Sales volume

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27
Q

What is market positioning?

A

Appealing to particular or new market segment.

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28
Q

Why do firm’s set marketing objectives for security/survival?

A

It is a common objective for new start-up firms,
Those in difficult financial positions
During a recession

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29
Q

What does differentiation mean?

A

Creating a unique selling point and making the brand stand out from rivals.

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30
Q

What does adding value to existing products mean?

A

Carrying out methods to ensure consumers are willing to pay a high price for the product/service.

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31
Q

What are some methods adding value to existing products includes?

A

High quality
Strong brand image
Excellent customer service

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32
Q

What is sales growth?

A

Percentage change in sales {volume or value} over a period of time for a specific brand.

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33
Q

What is market growth?

A

Percentage change in sales {volume or value} over a period of time for a whole market.

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34
Q

Formula for percentage change.

A

(New figure - original figure/original figure ) x 100

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35
Q

Formula for market growth.

A

( New market size - original market size/original market size) x 100

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36
Q

Formula for sales growth.

A

(New sales - original sales/ original sales) x 100

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37
Q

Why will firms want to enter markets that are growing?

A

To maximise sales.

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38
Q

What will market growth attract?

A

Many rivals

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39
Q

Market growth can be difficult to achieve for one firm so they may set targets to move into new growing markets by doing what?

A

Targeting new customers
Developing new products
Completely diversifying

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40
Q

What does ‘completely diversifying’ mean?

A

New products in new markets

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41
Q

Give example of firms which have set targets to move into new growing markets.

A

Microsoft and Lenovo moving into the mobile phone market in recent years

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42
Q

List 5 factors which influence market growth.

A
  1. Economic growth
  2. Type of product
  3. Social changes
  4. Demographic changes
  5. Changes in taste and fashions
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43
Q

How does economic growth influence market growth if a country’s economy is growing?

A

Employment, pay levels and therefore consumers’ disposable income will be higher resulting in better sales and market growth, particularly for luxuries such as holidays.

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44
Q

How does economic growth influence market growth if a country’s economy is declining?

A

Consumers’ disposable income will be lower which may see them buying less or switching to cheaper products.
Some goods may see sales increase, especially those that focus on low prices, such as Primark and supermarket own-brands.

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45
Q

How does the type of product a business sells affect market growth?

A

Luxury products will grow in sales most when the economy is growing and suffer when people are more worried about their spending.

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46
Q

What does it mean to say social changes influence market growth?

A

Changes in the general public’s behaviour will influence market growth.

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47
Q

Give the 1st example of how social changes influence market growth.

A

Consumers spending more time at home combined with low supermarket drink prices resulting in a decline in pubs but a rise in pay-for-TV services such as Sky and Virgin​

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48
Q

Give the 2nd example of how social changes influence market growth.

A

An increase in working hours and working households has made consumers cash-rich but time-poor resulting in demand for convenience products like readymade meals and restaurants

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49
Q

Give the 3rd example of how social changes influence market growth.

A

The popularity of healthy lifestyles resulting in growth of certain healthy food products and e-cigarettes.​

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50
Q

How do demographic changes influence market growth?

A

Changing make-up of the UK population may see certain types of product markets become more popular

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51
Q

Give an example of how demographic changes influence market growth.

A

UK has an ageing and increasingly diverse population = growth in certain trends of products that were previously more niche, cultural or age-specific items.

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52
Q

Give an example of how changed in taste and fashions influence market growth.

A

Trends on television such as cookery, or mobile phone popularity causing app sales growth.

Firms can influence what is popular and therefore market growth through their own marketing efforts.

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53
Q

What is market share?

A

Percentage of the total sales of a product or service achieved by one business compared with the total sales in the market.

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54
Q

What unit is market share presented in?

A

Percentage (%)

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55
Q

Formula for market share.

A

(Sales of one brand/total sales in the market) x 100

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56
Q

What is a market in business?

A

Consists of all buyers and sellers of a particular good.

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57
Q

What is the key difference between customers and consumers?

A

Customer is the one purchasing the goods.
Consumer is the one who is the end user of any goods or services.

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58
Q

What is market share a key measure of?

A

A company’s success as it compares its sales with those of its rivals.

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59
Q

How does a firm increase their market share?

A

Perform better than its rivals to take some of their customers.

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60
Q

How would a firm set out to achieve its objectives of becoming market leader?

A

Having:
Having highest market share
Maintain existing market share
Increase market share in particular section of the market

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61
Q

Give an example of a market leader who has seen their market share fall.

A

Tesco is currently market leader in the supermarket industry.
Has seen their market share fall from 30.3% in 2013 to 28.9% with intense competition.

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62
Q

Define ‘brand’.

A

The set of physical attributes of a product or service, together with the beliefs and expectations surrounding it – a unique combination which the name or logo of the product or service should evoke in the mind of the audience. (CIM definition)

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63
Q

What is the purpose of a brand?

A

To differentiate a company from its rivals.

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64
Q

What things represent a brand?

A

Names
Logos
Slogans, etc.

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65
Q

Define ‘brand loyalty’.

A

A measure of the degree of attachment that a consumer has for a particular brand. Loyal customers are more likely to make repeat purchases and less likely to switch to rival brands.

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66
Q

Why is brand loyalty essential?

A

It is considered much cheaper to retain existing customers than attract new ones.

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67
Q

Why is brand loyalty important for firms?

A

It will ensure customers return for repeat purchases ​

Firms will need to spend less on promotions as consumers are already convinced about the brand​

Companies may be able to charge higher prices as it reduces a brand’s price elasticity.

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68
Q

What is price elasticity?

A

the amount demand changes as price changes

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69
Q

If consumers are more committed to the brand, they may be willing to pay higher prices even if they change-What does this mean about the consumers?

A

They become less price sensitive.

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70
Q

What are external factors define as?

A

Those outside the business, often listed under the heading PESTLE, that may impact what objectives a firm sets.

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71
Q

List 8 examples of external influences on marketing objectives and decisions.

A
  1. Political and legal factors
  2. Economic factors
  3. Social factors
  4. Technological change
  5. Ethical and environmental factors
  6. State-of-the-market factors
  7. Competitor actions
  8. Customers and supplies
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72
Q

How do political and legal factors influence marketing objectives and decisions?

A

Government policies impact marketing and what firms can do.

Multinational firms need to be aware of foreign legislation and policies. How do government policies impact consumer spending?

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73
Q

Give some examples of how political and legal factors influence marketing objectives and decisions.

A

Banning advertisements on cigarettes and unhealthy foods during children’s television

Taxation and spending cuts impacts consumer spending

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74
Q

How do economic factors influence marketing objectives and decisions?

A

Includes:
Growth or decline
Disposable income levels
Current level of interest rates
Can firm compete on price or quality

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75
Q

How do social factors influence marketing objectives and decisions?

A

What are existing tastes and fashions?

How do demographic factors impact a company’s objectives and actions?

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76
Q

How does technological change influence marketing objectives and decisions?

A

How do developments in technology impact marketing activities – for example, social media, mobile phones, apps?

How are rivals using technology?

What do consumers expect?

How is market research gathered?

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77
Q

How do ethical and environmental factors influence marketing objectives and decisions?

A

Do consumers care about these issues?

Do the company’s products cause any negative ethical issues?

Is there any legislation in this area?

Can higher prices be charged for more ethical products?

Are workers treated ethically?

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78
Q

How do state-of-the-market factors influence marketing objectives and decisions?

A

Is there growth in the market?

Is the company able to focus on growth, or just on survival?

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79
Q

How do competitor actions influence marketing objectives and decisions?

A

How intense is the rivalry?

How well are rivals performing?

Will they operate in a niche or mass market?

What are current market shares?

What strategies are they pursuing?

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80
Q

How do customers and suppliers influence marketing objectives and decisions?

A

What do consumers expect from the firm – for example, price, quality, service, reliability, etc.?

Can suppliers meet the expectations and needs of the firm?

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81
Q

What are internal influence?

A

Factors inside the business.

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82
Q

List 5 examples of internal influences on marketing objectives and decision.

A
  1. Business/corporate objectives
  2. Finance
  3. Human resources (HR)
  4. Operational issues
  5. Type of product
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83
Q

How does finance influence marketing objectives and decisions?

A

The financial position of the business will determine what resources can be allocated to achieve the objectives.

Objectives allow firms to establish their priorities and therefore where finances should be allocated.

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84
Q

How does finance influence marketing objectives and decisions?

A

The financial position of the business will determine what resources can be allocated to achieve the objectives.

Objectives allow firms to establish their priorities and therefore where finances should be allocated.

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85
Q

How do business/corporate objectives influence marketing objectives and decisions?

A

The marketing objectives are set to ensure the marketing department contributes towards achieving the overall corporate objectives.

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86
Q

How does Human Resources (HR) influence marketing objectives and decisions?

A

The workforce will determine what marketing objectives can be achieved and the qualities of the workforce all impact their ability to achieve marketing objectives.

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87
Q

What qualities of a workforce determine whether it is good enough to achieve marketing objectives?

A

Size
Skills
Motivation
Level of training
Customer service
Decision making of workforce

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88
Q

How do operational issues influence marketing objectives and decisions?

A

A company must offer an integrated approach so if quality is a key brand feature than the marketing must focus on this and the product must match.
The operation must ensure the company can deliver on promises.

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89
Q

What are some key examples of promises the operation must ensure the company can deliver on?

A

Internet sales
Delivery times
Stock quantities

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90
Q

How does the type of product influence marketing objectives and decisions?

A

What is the company know for?

Does it have a unique selling point?

Has it established a reputation for a particular type of product?

Is it a necessity or a luxury?

What are the industry standards or marketing and budgets? ​

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91
Q

What does PESTLE stand for?

A

Political
Economic
Social
Technological
Legal
Environmental factors

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92
Q

What is PESTLE analysis used for?

A

Allows a company to form an impression of the factors that might impact a new business or industry.

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93
Q

List the 5 aspects of the market which firms need to analyse.

A
  1. Size of the market
  2. Growth in the market
  3. Market structure
  4. Segmentation of the market
  5. Social trends
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94
Q

What do firms do with the data which they acquire from different aspects of the market which they analyse?

A

See where they require improvement
Check whether a product is viable (achievable)
Identify opportunities and threats
Identify future trends

Firm can then devise new plans and strategies.

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95
Q

What questions does a business ask when it comes to analysing the size of the market?

A

Is it big enough?

Is it feasible (achievable) for the firm to operate in?

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96
Q

What questions should a business ask when analysing growth in the market?

A

Does the market have enough future potential?

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97
Q

What questions should a business ask when it comes to analysing market structure?

A

What level of competition is there?

How intense will the competition be?

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98
Q

What questions should a business ask when analysing segmentation of the market?

A

Who will the company be targeting?

What are their needs, wants and tastes?

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99
Q

What should a business look at when analysing social trends?

A

Changing lifestyles
Demographics
Fashions

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100
Q

What are the 3 different methods of interpreting marketing data?

A
  1. Correlation
  2. Confidence intervals
  3. Extrapolation
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101
Q

What is correlation?

A

A statistical technique which looks at the strength of the relationship between two variable and how they are related.

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102
Q

What is an independent variable?

A

The variable that causes a change in the other.

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103
Q

What is a dependent variable?

A

Variable that is impacted by the change in the independent variable.

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104
Q

What is positive correlation?

A

A direct relationship between two variables.

As the independent variable increases the dependant variable increases.

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105
Q

Give an example of a positive correlation.

A

As more is spent on advertising, sales increase.

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106
Q

What is a negative correlation?

A

An inverse relationship between two variables.

As the dependant variable falls the independent variable rises and vice versa.

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107
Q

Give an example of a negative correlation.

A

As investment in training increases, product defect falls.

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108
Q

What does no correlation mean?

A

There is no link between the two variables.

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109
Q

How is a positive correlation expressed numerically?

A

+1

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110
Q

How is a negative correlation expressed numerically?

A

-1

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111
Q

How do you work out how strong or weak a correlation is?

A

The closer the figure is to +1 or -1, the stronger the positive or negative correlation.

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112
Q

How are causation and correlation related?

A

Causation is the outcome of the correlation between the decisions you make.

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113
Q

Give an example of where something appears to be correlated but there is no causation. [NOT BUSINESS RELATED]

A

For example, obesity levels in the UK rising with the level of organic food sales increasing.

On a graph they would appear positively correlated but in reality have no impact on one another.​

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114
Q

What can no estimated data be?

A

100% reliable

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115
Q

Why is correlation analysis important in business decision-making?

A

Understanding the impact of business initiatives on desired outcomes can help companies identify trends, uncover hidden opportunities, refine strategies, allocate resources more efficiently, and make better decisions overall.

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116
Q

What do confidence intervals help businesses do?

A

Understand how reliable an estimate is.
How confident they can be to act on the data when planning strategy and making decisions.

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117
Q

What does a confidence interval give?

A

The percentage probability that an estimated range of possible values includes the actual value being estimated.

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118
Q

What does a 90% confidence level mean?

A

A prediction will be correct 9 times out of 10.
90% of the time.

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119
Q

What percentage will most business use as their choice of confidence level when using data in decision-making?

A

95%

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120
Q

[NOT TO MEMORISE-JUST KNOW] Give an example of how confidence intervals work.

A

Business wishes to carry research on consumer’s views of their new product.

Impossible to survey the whole UK

Company survey 2000 people

A confidence interval can be created to give the range of possibilities and accuracy of the data in making decisions. The firm might predict that there is a 97 per cent chance that the overall trend −for example, that the majority of consumers liked the product− would be found. ​

The confidence interval in this example is 97 per cent, and the likelihood that the outcome if done again is outside the estimated range is 3 per cent.​

If data had a confidence interval of 97 per cent it would mean that if a wide range of samples were taken the same data/answer would be found in 97 per cent of the samples. ​

Therefore it would not be found in 3 per cent of the samples in the long term.​

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121
Q

What does extrapolation involve?

A

Using patterns in past data to predict (forecast) future level of sales for products or services.

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122
Q

What is extrapolation used to help?

A

Plan production
Staff levels
Marketing
Set targets

123
Q

What is extrapolation a crucial part of?

A

Market planning and strategies.

124
Q

List the 1st 2 reasons for which extrapolation can be used for in detail.

A
  1. Measure performance of individuals/departments - did they meet the forecast?
  2. Workforce planning- How many staff will they need to satisfy demand?
125
Q

List the last 3 reasons for which extrapolation can be used for in detail.

A
  1. Marketing department can plan what strategies they will need to hit the forecast.
  2. Plan production levels and schedules.
  3. Produce realistic and motivating targets for the company
126
Q

Name the 1st 3 ways a firm may extrapolate data to forecast future sales.

A
  1. Asking individual experts’ views, for example, management consultants.
  2. Individual management hunches based on past experience
  3. Using back data (past sales figures) and predicting existing trend will continue e.g., calculating the average change (percentage or actual sales value) for a period of time and then extrapolating data into the future.
127
Q

Name the 2nd 3 ways a firm may extrapolate data to forecast future sales.

A
  1. Basing predictions on market research data carried out before a product launch.
  2. Assuming that patterns will continue into the future, for example, sales increase of 15% per annum will continue into the future.
  3. Forecasting (extrapolating) data visually by carrying on a trend through calculation (recommended for greater accuracy), for example, percentage changes or average increases.
128
Q

what is a better way of calculating extrapolation?

A

It could be calculated more accurately using a percentage change that changes in line with the rate of change previously or expected change in the market or even consumer income changes or GDP growth. ​

129
Q

Name the 4 advantages of extrapolation.

A
  1. Used to predict future sales, which can help in planning operation, workforce requirements, marketing efforts, etc.
  2. Can be done relatively quickly at little costs
  3. Can be based on past years’ data
  4. Useful in steady predictable markets.
130
Q

Name the 6 disadvantages of extrapolation.

A
  1. Not reliable in dynamic fast changing markets, e.g. technology​
  2. Does not factor in unexpected external changes (qualitative factors), e.g. economic changes, tastes and fashions, etc.​
  3. Assumes past trends will continue​
  4. Forecasts may result in a firm only achieving their forecasts rather than actual growth​
  5. Data may be biased, e.g. a fast food company carrying out studies on health benefits of some of its ingredients​
  6. Forecasts too far into the future will have little value
131
Q

List the 1st 3 questions market analysis will allow firms to answer.

A
  1. What opportunities are there in the market?
  2. What should we invest in to be successful and how will it impact the business?
  3. What priorities must we set with our limited budget?
132
Q

List the last 4 questions market analysis will allow firms to answer.

A
  1. How should we structure our business to take advantage of any opportunities or to respond to threats?
  2. What are the future trends for the market we operate in?
  3. Is there growth in this market?
  4. What influences consumer demand in this market?
133
Q

What does a company need to make sure forecasting is accurate and successful?

A

Skilled staff

Reliable research

Established product in stable market

Test marketing

134
Q

What are some implications (happen as a result of) of incorrect forecasting?

A

May lose market share

If managers underestimate, the company cannot meet orders -loss of revenue and customer goodwill.

Is the workforce flexible and able to adjust?

Are the goods perishable or expensive to store?

Will produce poor business planning therefore wasted resources if overestimated, for example raw materials, staff

135
Q

What does test marketing involve?

A

Replicating all elements of a product launch, (such as the promotion, distribution and price) to a specific planned smaller geographic region or demographic group to judge the viability of the product in the market before a full-scale launch.

136
Q

What is test marketing used to do?

A

Important part of market research used to inform market planning by many firms.

137
Q

What does test marketing provide an important opportunity for?

A

Feedback from actual consumers to modify the product before the actual product launch.

138
Q

How to many retailers and manufacturers carry out test marketing?

A

Trial new products, ideas and strategies in different stores in regional areas and compare result.

The most successful products are then expanded into the other stores in different areas of the country/world.

139
Q

[JUST NEED TO KNOW-NOT COMPLETELY MEMORISE] Give an example of a firm using test marketing.

A

McDonalds, along with many US fast food chains, test markets in Columbus, Ohio which has a population demographic and income level which reflects the national averages and advertising is very affordable in the area.​

McDonalds releases many different products but not all are rolled out to the whole country. For example, the McLobster only found popularity in New England and Eastern Canada.

140
Q

List the 3 positives of test marketing.

A
  1. Actual sales results can be used to inform decisions
  2. Minimises risk and firms do not waste high costs on a product launch if it is not going to be successful.
  3. Can generate feedback to modify the product
141
Q

List the 3 negatives of test marketing.

A
  1. Tastes in one area may not translate to the rest of the market
  2. Can be costly and time consuming
  3. May give competitors time and opportunity to respond if test marketing delays the full launch.
142
Q

What types of modern technology can firms use to gather data and analyse their market (which can be analysed using various computer software)?

A

Internet data including website, social media, blogs

CCTV in store

Store cards e.g., Tesco Club Card, Nectar card

Sales data using EPOS

Online questionnaires and internet surveys

143
Q

What does EPOS stand for?

A

Electronic point of sale

144
Q

What is EPOS used for?

A

It is a system used in retail stores to process customer sales.

The system is used to capture customer data and process payment transactions.

It also helps retailers manage inventory and track sales.

145
Q

What are the advantages of using technology in gathering and analysing data for marketing decision-making?

A
  1. Data can be processed and analysed quickly and in greater depth using ICT to accurately inform sales forecasting (extrapolation)​
  2. Customer database can be constructed using consumer data collected. It can then be used as part of an effective direct marketing campaign and to continue to modify and adapt the product portfolio to consumers’ changing tastes
146
Q

What are the disadvantages of using technology in gathering and analysing data for marketing decision-making?

A
  1. Too much information can be hard to analyse and may actually slow down decision-making ​
  2. Trends can be misunderstood and mistakes can be made as data can be gathered too quickly and time may be needed to spot the true trend​
  3. Can be costly to acquire the required technology and activities to be able to gather the data. For example, Tesco’s Club Card [programme] costs approximately £500m a year [to run]
147
Q

What does PED stand for?

A

Price elasticity of demand.

148
Q

What does PED measure?

A

Degree to which demand will change in response to a change in price.

149
Q

Formula for PED.

A

percentage change in quantity demanded / percentage change in price

150
Q

In regards to PED, what are elastic goods?

A

Products where demand will change with a price change.

151
Q

In regards to PED, what are inelastic goods?

A

Product where demand is relatively unresponsive to a change in price.

152
Q

In regards to PED, what is unitary elasticity?

A

A product where any price change is cancelled out by the demand change.

Price change affects the quality demanded at an equivalent percentage.

153
Q

Give an example of unitary elasticity in PED.

A

When the price of a good rises 3%, the quantity demanded decreases by 3%.

When price of a good drops by 3%, quantity demanded increases by 3%.

154
Q

In numbers, in regards to PED, how will elastic goods be shown?

A

Answer greater than 1

155
Q

In numbers, in regards to PED, how will inelastic goods be shown?

A

Answer less than 1

156
Q

In numbers, in regards to PED, how will unitary elasticity be shown?

A

An elasticity of 1

157
Q

What will PED figure always be?

A

Negative

158
Q

Why are PED figures always negative?

A

When prices go up demand falls.

When prices fall, demand rises.

The relationship between these variables is opposite and therefore negative.

159
Q

Would this product be price elastic or price inelastic?
-2.5

A

Price elastic

160
Q

What does IED stand for?

A

Income elasticity of demand

161
Q

What does IED measure?

A

The degree to which demand will change in response to a change in consumer income.

162
Q

Formula for IED.

A

Percentage change in quantity demanded/ Percentage change in income

163
Q

What are income elastic goods?

A

Where demand will change by a more significant amount with an income change.

164
Q

Why does demand change for income elastic goods?

A

Customers will wish to purchase more as they become wealthier.

Usually luxury goods such as holidays and electrical goods.

165
Q

What are income inelastic goods?

A

Products where demand is relatively unresponsive to a change in consumer income.

166
Q

Why is demand relatively unresponsive with income inelastic goods?

A

These are products where consumers do not generally demand a great deal more as they gain in income.

Usually necessity products, such as basic foods and fuel.

167
Q

What is unitary income elasticity?

A

Where any consumer income change is cancelled out by the demand change.

IED is said to be unitary when there is a proportionate (balanced) change in a (increase) for a product.

168
Q

Give an example of unitary income elasticity.

A

If there is a 25% increase in the income of a consumer, the demand for milk consumption would also be increased by 25%.

169
Q

In number form, how are income elastic goods shown?

A

Answer greater than 1

170
Q

In number form, how are income inelastic goods shown?

A

Answer less than 1

171
Q

In number form, how is unitary income elasticity shown?

A

An elasticity of 1

172
Q

What type will income elasticity usually be?

A

Positive

173
Q

Why is income elasticity usually positive?

A

When consumer income goes up, demand will usually increase.

174
Q

Which type of goods will have a negative IED?

A

Inferior goods

175
Q

Give an example of inferior goods.

A

Supermarket own brands

176
Q

Why will inferior goods have a negative IED?

A

As consumers’ income rises, demand will fall.

177
Q

What types of factors may influence PED?

A

Necessity or luxury good
Habit forming
Brand loyalty
Proportion of income spent on the product
Availability of substitutes

178
Q

What is meant by market-led?

A

relating to an approach to business in which the customer’s requirements are identified by market research before a product or service is released

179
Q

What do market-led firms aim to learn?

A

What consumers want and provide it

180
Q

What do asset-led firms produce?

A

unique products they know will change markets and that consumers will want, creating a sustainable competitive advantage.

181
Q

What factors affect the level of market analysis needed by a business and how successful it is?

A

The type of market the firm is in and the strengths of the business in terms of its staff, skills and brand.

182
Q

What does the term asset-led marketing mean?

A

Uses product strengths such as the name and brand image to market both new and existing products.

Marketing decisions are based on the needs of the consumer and the assets of the product.

183
Q

What is primary research?

A

Data collected first-hand for a specific research purpose.

184
Q

Give examples of primary research.

A

Focus groups

Face-to-face interviews

Online surveys and questionnaires

Mystery shoppers

Products testing and trials

185
Q

List the advantages of primary (market) research.

A

Directly focused to research objectives (fit for purpose)

Tends to be up to date

More detailed insights-particularly into customer views.

186
Q

List the disadvantages of primary (market) research.

A

Time-consuming

Often costly to obtain

Risk of survey bias

Research samples may not be representative of the population.

187
Q

What is secondary research?

A

Data that already exists and which has been collected for a different purpose.

188
Q

Give some examples of secondary (market) research.

A

Market reports

Trade and industry associations

Sales transactions

Big data

Analytics

189
Q

Advantages of secondary (market) research.

A

Often free

Often easy to obtain

Good source of market insights

Quick to access and use

190
Q

Disadvantages of secondary (market) research.

A

Can quickly become out of date

Not always tailored to specific research needs

Specialist reports often quite expensive

191
Q

What is quantitative research?

A

the process of collecting and analysing numerical data

192
Q

What kinds of questions does quantitative research answer?

A

How often
Who
How many
When
Where

193
Q

What type of sample is quantitative research carried out on and what does this make it?

A

Larger-therefore is more statistically valid.

194
Q

What are the main methods of obtaining quantitative data?

A

Through various forms of surveys:
Telephone
Postal
Face-to-face
Online

195
Q

Benefits of quantitative research.

A

Data relatively easy to analyse.

Numerical data provides insight to relevant trends

Can be compared with data from other sources e.g., competitors, history

196
Q

Drawbacks of quantitative research.

A

No focus on why things in data happen

Doesn’t explain reason behind numerical trends

May lack reliability if sample size and method is not valid

197
Q

What is qualitative research based on?

A

Opinions, attitudes, beliefs and intentions

198
Q

What type of questions does qualitative research answer?

A

Why would
How

199
Q

What did qualitative research aim to understand?

A

Why customers behave in a certain way or how they may respond to a new product or service.

200
Q

What are some common methods used to collect qualitative data?

A

Focus groups
Interviews

201
Q

Benefits of qualitative research.

A

Essential for important new product development and launches

Focused on understanding customer needs, wants, expectations (very insightful for a business)

Can highlight issues that need addressing (why customers don’t buy)

Effective way of testing elements of the marketing mix (new branding, promotional campaigns)

202
Q

Drawbacks of qualitative research.

A

Expensive to collect and analyse (requires specialist research skills)

Based around opinions (Always a risk that sample is not representative)

203
Q

What does sampling involve?

A

Gathering data from a sample of respondents.
The results of which should be representative of the population (e.g., target market) as a whole.

204
Q

Benefits of sampling.

A

Even a relatively small sample size (if representative) can provide useful research insights

Using sampling before making marketing decisions can reduce risk and costs

Sampling is flexible and relatively quick

205
Q

Drawbacks of sampling.

A

Biggest risk is that it could be unrepresentative of the population.

Could lead to incorrect conclusions

Risk of bias in research questions

Less useful in market segments where customer tastes and preferences are changing frequently

206
Q

Which axis is the dependent variable plotted on a scatter graph normally?

A

Y-axis

207
Q

Which axis is the independent variable plotted on a scatter graph normally?

A

X-axis

208
Q

On which type of graph is correlation data plotted on?

A

Scatter graph

209
Q

What is the “line of best fit” also known as?

A

A regression line.

210
Q

What does the “line of best fit” attempt to plot?

A

The mathematical relationship between the variables based on the data points.

211
Q

What does the “line of best fit” indicate?

A

The strength of the correlation
Whether the correlation is weak or strong.

212
Q

How does a “line of best fit” show a strong correlation?

A

There is little room between the data points and the line.

213
Q

How does a “line of best fit” show a weak correlation?

A

The data points are spread quite wide and far away from the line of best fit.

214
Q

If the data suggests strong correlation, what will the relationship be used to make?

A

Marketing predictions

215
Q

How do businesses benefit from confidence intervals?

A

Businesses benefit from the use of statistics in estimating or predicting future events.

216
Q

What do confidence intervals help a business do?

A

Evaluate the reliability of a particular estimate.

217
Q

How can confidence intervals be used in quality management?

A

Look at percentage reliability of machines
Chance that quality control samples will detect issues.

218
Q

What does elasticity measure?

A

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

219
Q

How does brand strength influence PED?

A

Products with strong brand loyalty and reputation tend to be price inelastic.

220
Q

How does necessity influence PED?

A

The more necessary a product, the more demand tends to be inelastic.

221
Q

How does habit influence PED?

A

Products that are demanded and consumed as a matter of habit tend to be price inelastic.

222
Q

How does availability of substitues influence PED?

A

Demand for products that have lots of alternatives (substitutes) tends to be price elastic.

223
Q

How does time influence PED?

A

In the short-run, price changes tend to have less impact on demand than over longer periods.

224
Q

Give examples of products with price elastic demand.

A

Chocolate
Bread
Newpaper

225
Q

Give examples of products with price inelastic demand.

A

Transport tickets
Cigarettes
Sports tickets
Branded bags

226
Q

Give examples of income elastic products.

A

Consumer goods
Expensive holidays
Branded goods

227
Q

Give examples of income inelastic products.

A

Staple groceries e.g., milk
Gasoline

228
Q

Why does demand fall for inferior goods?

A

Consumers switch to better alternatives
Substitute products become affordable

229
Q

What are the 2 main steps businesses take to use marketing to create value for customers?

A
  1. Choose which customers to serve
  2. Decide how to serve those customers
230
Q

What is market segmentation?

A

Involves dividing a market into parts that reflect different customer needs and wants.

231
Q

What are the main categories of market segmentation?

A

Demographic segments
Geographic segments
Income segments
Behavioural segments

232
Q

What are socio-economic groups?

A

Where households are characterised by the major earner’s job which therefore links to their interests, lifestyle and income level.

233
Q

What categories could demographic segmentation be split into?

A

Age
Gender
Occupation
Socio-economic group

234
Q

Why might businesses look at income levels in the process of segmentation?

A

Certain goods/services are aimed at individuals with certain levels of disposable income

235
Q

Give examples of businesses who might look at income in the process of segmentation.

A

Rolex
Porsche
Aldi
Lidl
Iceland

236
Q

Why might businesses look at geographical region during the process of segmentation?

A

Firms can look at where particular consumer types live, what the income levels are like, whether it is rural or inner city.

237
Q

What does ACORN stand for?

A

A Classification Of Residential Neighbourhoods

238
Q

What is ACORN?

A

System that segments markets according to a wide variety of types of households and the characteristics of the families that live in them.

239
Q

How is ACORN set up?

A

Done by postcode

240
Q

How does ACORN help businesses?

A

Better informs businesses on where to set up and where to target certain marketing activities to be most cost effective.

241
Q

Why is behavioural segmentation thought about in the process of segmentation?

A

Consumers can be divided into groups based on the way they respond to, use or know of a product.

242
Q

What 5 categories can behavioural segmentation be divided into?

A

Lifestyle
Level of brand loyalty
Benefits sought by consumers
Purchase occasion
Frequency of usage

243
Q

How does lifestyle influence bahvioural segmentation?

A

Hobbies, tastes and interest all influence buying behaviour

244
Q

How does benefits sought by consumers influence buying behaviour?

A

What are they looking for from the product?
Why and when do they purchase it?

245
Q

How does purchase occasions influence buying behaviour?

A

Need to think about-when do people buy the product?

246
Q

Give examples of how purchase occasion influence buying behaviour.

A

Greeting card firms need to create more reasons to buy cards beyond established holidays.
Kellogg’s increased the number of occasions consumers are encouraged to use their product with their ‘eating it twice a day’ diet.

247
Q

How does frequency of usage influence buying behaviour?

A

Are they ‘early adopters’ who are willing to buy the product on release?
Are consumers heavy, medium or light users?

248
Q

Give examples of how frequency of usage influences buying behaviour.

A

‘Early adopters’ =Apple’s loyal customers or those who queue at midnight when new games or consoles are released.
Heavy, medium, light users= cigarette companies or mobile phone operators.

249
Q

List the 1st 3 benefits of effective market segmentation.

A
  1. Can better design their marketing mix to increase sales and market share​
  2. Builds a strong brand identity and establish loyalty​
  3. Helps plan suitable new products to meet their chosen market segments
250
Q

List the last 3 benefits of effective market segmentation.

A
  1. Can better understand the company’s target market including its characteristics, needs and wants​
  2. Can focus resources better where they will succeed
  3. Allows a business to grow shares in markets or to “ride the wave” of fast-growing segments.
251
Q

List the potential drawbacks with market segmentation

A
  1. Segmentation is an imprecise science-data not always available, up to date or reliable
  2. Just because you can identify a segment doesn’t mean you can reach the customers in it!
  3. Markets are increasingly dynamic -fast-changing: so too are the segments.
252
Q

List the first 3 difficulties with market segmentation.

A
  1. Firms can find it difficult to identify the most important segments for a product.​
  2. Constant research is needed to keep up to date with consumer tastes and anticipate consumer taste changes.​
  3. Products may become too specific to one market segment not catering to the tastes of others thereby reducing sales.
253
Q

List the last 2 difficulties with market segmentation.

A
  1. Companies may ignore potentially lucrative segments.​
  2. Firms may find it difficult to reach their chosen market segment, for example, younger audiences not reading as much physical print and streaming television and films online means avoiding traditional advertising channels.
254
Q

What is market targeting?

A

Deciding the market segments the company will aim to sell their products/services to; known as their target market.

255
Q

What is a target market?

A

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

256
Q

What are the 3 main strategies for targeting a market?

A
  1. Concentrated (niche) marketing
  2. Differentiated (segmented) marketing
  3. Undifferentiated (mass) marketing
257
Q

What is concentrated (niche) marketing?

A

Where a products is aimed at a very well defined and specific market segment (niche).

258
Q

What does concentrated (niche) marketing allow firms to do?

A

Focus and avoids need for mass production

259
Q

What is differentiated (segmented) marketing?

A

Targeting several different market segments with different products

260
Q

What is undifferentiated (mass) marketing?

A

Targeting the whole mass market with one product.

261
Q

What is product proliferation?

A

When a firm sells a range of products aimed at different markets.

262
Q

Give an example of product proliferation.

A

Volkswagen motor company owns a range of different brands, including Audi, Bentley, Bugatti, Lamborghini, Porsche, Seat, Skoda and Volkswagen.

263
Q

What is market positioning?

A

Where a firm’s products/services are in a market in relation to its rivals

264
Q

Based on what factors will a firm base market positioning on? Name a few.

A

Price
Value
Quality
Product use
Features etc.

265
Q

What will firms create in order to have a sustainable competitive advantage when it comes to market positioning?

A

USP

266
Q

What does USP stand for?

A

Unique Selling Point

267
Q

What is a USP?

A

Something that differentiates it from its rivals to provide it with a sustainable competitive advantage.

268
Q

What 2 main options do companies have when deciding on market position and who to aim at?

A

Small market segment (niche marketing)
Across all market segments (mass marketing)

269
Q

What is niche marketing?

A

When firms target a product or service at a small segment of a larger market.

270
Q

How does niche marketing allow firms to tailor their products/services?

A

To particular type of customer and their tastes

271
Q

With smaller consumer groups in a niche market, what are firms able to build better?

A

More direct relationships.
Get to know their wants and needs more specifically.

272
Q

Give examples of niche markets which are able to build better relationships and get to know their consumer’s wants and needs more specifically.

A

Hornby model railways
Porsche cars

273
Q

What does niche marketing limit?

A

Potential sales
Market size

274
Q

How is compentition made more intense in a niche market?

A

If larger rivals spot a successful niche they may decide to enter the market making competition more intense.

275
Q

List the 1st 3 advantages of niche marketing.

A
  1. Possible to build intense customer loyalty – for example, Games Workshop.​
  2. Firms can set up and operate on a smaller scale helping to keep costs lower and decrease risk.​
  3. Businesses can more easily differentiate themselves to create sustainable competitive advantage by tailoring their products/services to meet their consumers’ specific tastes. This will help to create a unique selling point (USP).
276
Q

List the last 3 advantages of niche marketing.

A
  1. Lower levels of competition may result in higher market share and possible monopoly power.
  2. Higher prices can be charged with this USP and higher added value.​
  3. It is easier to design your marketing mix and target customers when you know the exact characteristics, needs and wants of your specific target market.
277
Q

What is a monopoly in business?

A

Occurs when a single company is the only provider of a product or service in a given market sector.

278
Q

List the 1st 2 disadvantages of niche marketing.

A
  1. New rivals entering the market will have a considerable impact particularly as the barriers to entry are relatively small.​
  2. Larger rivals may enter the market if it becomes very profitable.
279
Q

List the last 2 disadvantages of niche marketing.

A
  1. Changing consumer tastes will have a considerable impact
  2. Unfortunately, lower profits may be made as firms operate on smaller scales and cannot reduce their unit costs through economies of scale.
280
Q

What is economies of scale?

A

Cost advantages reaped by companies when production becomes efficient

281
Q

What is mass marketing?

A

A strategy of selling goods with mass appeal and promoting them to all types of customers.

282
Q

Give examples of companies who mass market.

A

Esso
BP
Shell
Heinz Baked Beans
Hovis

283
Q

Why do mass marketing firms aim their products/services at all or most of the market?

A

To maximise their sales and profit potential

284
Q

What is the ultimate aim for mass marketing firms?

A

To create a generic brand that is renowned for a particular product.
E.g., Sellotape, Post-it, Hoover.

285
Q

What does mass marketing provide a firm with less of?

A

Less potential for targeting specific consumer groups and adapting its products to their tastes.

286
Q

What does the mass marketing general approach prevent firms from focusing and tailoring their products to do?

A

Prevents firms from focusing and tailoring their products enough to have truly high demand or intense customer loyalty.

287
Q

What are the advantages of mass marketing?

A
  1. Large-scale production and economies of scale may be possible.
  2. Unit costs can be kept lower, helping to push prices down. ​
  3. Higher sales, revenue and profit are possible. ​
  4. High barriers to entry may mean decreased competition for already established firms.
288
Q

List the first 2 disadvantages of mass marketing.

A
  1. High costs as larger-scale operation and manufacture is needed to meet mass market demand.​
  2. Products must appeal to a wide range of consumers so firms are unable to easily add value by tailoring products to consumers’ specific tastes. This results in lower prices having to be charged.
289
Q

What do the higher barriers to entry include for mass marketing?

A

These may include:
High costs of set up
Existing rivals, brand loyalty
Low prices
Actions by rivals

290
Q

List the last 2 disadvantages of mass marketing.

A
  1. Consumer tastes change more quickly in mass markets and are harder to keep up to date with.​
  2. More competition often from large international rivals who compete using lower prices.​
291
Q

What can sometimes happen if a brand attempts to cater for all consumer types?

A

They may end up appealing to nobody.

292
Q

Give an example of how a firm can end up appealing to nobody when trying to cater for all consumer types.

A

Few young consumers will want to purchase products that are also aimed at older consumers.

This can be seen in the decline in usage of Facebook by younger people as their parents begin to use it.

293
Q

What does a marketing (positioning) map illustrate?

A

The range of “positions” that a product can tale in a market based on two dimensions that are important to customers.

294
Q

List some possible “dimensions” of a market map.

A

Low price and high price
Basic quality and high quality
Low volume and high volume (how many products are sold)
Necessity and luxury
Unhealthy and healthy

295
Q

What do customers choose products based on?

A

The value proposition (deal)

296
Q

What is a source of competitive advantage if it can be sustained?

A

Providing superior value than the competition.

297
Q

What are the 4 possible positioning strategies?

A
  1. Offer more for less
  2. Offer more for more
  3. Offer more for the same
  4. Offer less for less
298
Q

Give an example of a business who offer more for less.

A

Aldi.
Good quality at low prices

299
Q

Give an example how a business might offer more for more.

A

High-priced luxury products with the prestige value

300
Q

Give an example of how a business might offer more for the same.

A

Introduce new features and better performance for the same price.

301
Q

Give an example of how a business might offer less for less.

A

No-frills (simple), low-cost flying and hotels.
Good quality, back to basics and low price

302
Q

What are the advantages of market mapping?

A
  1. Helps spot gaps in the market
  2. Useful for analysing competitors
  3. Encourages use of market research
303
Q

What are the disadvantages of market mapping?

A
  1. Just because there is a “gap” doesn’t mean there is a demand
  2. Not a guarantee of success
  3. How reliable is the market research?
304
Q

How many sets of dimensions are plotted on one market map and give an example?

A

2
For example, you might plot low price and high price with basic quality and high quality

Business (16 decks)

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