3.3 Decision making to improve marketing performance Flashcards
(44 cards)
Value of setting market objectives
Helps coordinate activities within the business
Provide a focus for decision-making and effort
Provide incentives for marketing team and a measure of success / failure
Clear objectives helps clarify what the priorities are
Marketing Objectives - SALES VOLUME AND SALES VALUE
Sales volume - measures the level of sales in a given period in terms of units sold
Sales Value - measures the level of sales in a given a period in pounds sterling (in the UK)
Marketing Objectives - SALES GROWTH
Sales growth - the % change in sales volume or value over a given period
Marketing Objectives - MARKET SHARE
Market share - sales of a business % / total market sales % x 100
High market share is good for businesses because:
- high sales –> profit
Marketing Objectives - BRAND LOYALTY
Keeping customers is easier & cheaper than attracting new ones
Brand loyalty is important if the business is trying build a relationship with customers
Brands are valuable and can be sold later –> stronger the loyalty, the more possible gain
Influences on marketing objectives - INTERNAL
Functions of the business:
1) Finance
2) Human resources
3) Operations
Influences on marketing objectives - EXTERNAL (PESTLE)
POLITICAL - affects marketing targets that relate to where products are sold
ECONOMIC - changes in economy can affect demand for products e.g. through recession
SOCIAL - affects customers views of what is acceptable and what they expect from a product e.g. ethical?
TECHNOLOGICAL - affects how business communicate with customers and tracks their behaviour e.g. through e-commerce
LEGAL - determines what is allowed by the law
COMPETITORS - degree of competition in a market affects the range of options open to customers and what a business might have to offer to match its rivals
Primary market research - advantages & disadvantages
Involves gathering data for the first time e.g. through interviews, surveys
Advantages include:
- Provides detailed insights – particularly into customer views
Disadvantages include:
- Time-consuming and often costly to obtain
- Risk of survey bias – may not be representative of the population
Secondary market research - advantages & disadvantages
Data that already exists
Internal secondary data - comes from within the firm itself
External secondary data - data that has been published by other organisations
Advantages include:
- Already available so can be conducted quickly & cheaply
Disadvantages include:
- May not be the exact info your require
- May be out of date –> thus being useless
Quantitative Data (numbers) - PROS & CONS
Based on data in a numerical form & gathered through surveys
Advantages include:
- Relatively easy to analyse
- Can be compared with data from others e.g. competitors
Disadvantages include:
- Doesn’t explain the reasons behind numerical trends
- May lack reliability if sample size and method is not valid
Qualitative Data (opinions / beliefs)
Based on opinions & beliefs, gathered through interviews, and aims to understand why customers behave certain ways
Advantages include:
- Focused on customer needs, wants, expectations
Disadvantages include:
- Expensive to gather & analyse
- Based around opinions – risk that sample is not representative
Market Mapping - Advantages v Disadvantages
Analyses market conditions to identify the position of one product or brand relative to others in the market in terms of given criteria
Advantages:
- Help spot gaps in the market
- Useful for analysing competitors
- Clear & easy to interpret
Disadvantages:
- Just because there is a gap doesn’t mean there is demand for it
Value of sampling
Involves gathering data from a sample of respondents, results of which should be representative of the population as a whole
Interpretation of marketing data - CORRELATION
Looks at the strength of a relationship between two variables
Positive correlation - goes upwards on the graph
Negative correlation - goes downwards on the graph
No correlation - no relationship between the variables
Strong correlation - little room between the points and line
Weak correlation - points are spread quite wide and far away from the line of best fit.
Interpretation of market data - EXTRAPOLATION
Estimation of something from past data
Interpreting marketing data - CONFIDENCE INTERVALS
Confidence level - probability that research findings are correct e.g. 68% confidence levels means 68% that findings are correct
Confidence interval - possible range of outcomes for a given confidence level e.g. 68% confidence level that sales will be between £500,000 and £700,000
The more precise you want your confidence level to be e.g. from 500,000 - 700,000 to 550,000 - 680,000, the less certain researchers will be on their findings because its even more precise
Value of technology in gathering and analysing marketing data
Can gather more data on customers –> better understanding of them, faster & cheaper information which improves decision making
Data can provide detailed insights into buying patterns –> helps find correlations –> builds relationship with customers by anticipating what you want (buying habits)
PED (price)
PED = % change in quantity demanded / % change in price
Elastic - more than 1 –> luxury
- price increase –> demand decrease = revenue falls
- price decrease –> demand increase = revenues rises
Inelastic - less than 1 –> necessity
- price increase –> demand stays same = revenue rises
- price decrease –> demand stays same = revenue falls
YED (income)
YED = % change in quantity demanded / % change in income
Positive YED = normal products
- increase in income –> demand increase
- decrease in income –> demand decrease
Negative YED = inferior product
- increase in income –> demand decrease (because you can buy better alternatives
- decrease in income –> demand increase (lower budget so have to stick with lower priced goods which are inferior)
Segmentation - identifying needs & wants of different groups
Demographic - age, gender, race, income, religion
Geographic - based on geographical area
Income - socioeconomic grouping
Behavioural - based on buying habits
Pros and Cons of segmentation
Pros:
Effective marketing –> focus on needs and wants
Business growth - different markets? new products?
Customer experience - increased brand loyalty
Cons:
Expensive –> more markets means more money for R&D
Unprofitable target –> segments may not be large enough to generate profit
Target Markets - MASS MARKETING, pros & cons
Targets the whole markets, focuses on general needs and wants of customers
Pros:
Larger scope of customers –> increased sales
Brand awareness
Cons:
May face competition from businesses that fit specific needs & wants of customers (niche markets)
Target market - NICHE MARKETING, pros & cons
Targets smaller segments, specific needs & wants
Pros:
less competition
clear focus on needs & wants –> leads to customer loyalty
charge higher price – customers are prepared to pay for expertise –> higher profit margins
Cons:
Risk of over dependence on a single product or market
Vulnerable to market changes –> “eggs all in one basket”
7 elements of marketing mix
Product - good / service that the customer buys
Price - price of product
Place - distribution of product
Promotion - promoting the product e.g. advertising
People - people involved with customers when delivering the product e.g. employees
Process - systems that deliver a product to a customer
Physical environment - elements of physical environment to customer experiences
