3.3 Decision Making to improve marketing performance Flashcards
(234 cards)
1
Q
Define Price Elastic
A
Measure of how reactive the market is to a change in price. Elasticity > 1. Change in demand is more than change in price.
2
Q
Define Price Inelastic
A
Market is unreactive to price changes. Elasticity < 1. Change in demand is less than change in price.
3
Q
Define Income Elastic
A
Measures responsiveness of demand to a change in income. Elasticity > 1.
4
Q
Work out percentage change
A
Difference between 2 numbers ÷ original number × 100.
5
Q
Contextual example of Income Elasticity of Demand
A
Margarine vs Butter.
6
Q
Inferior Good (YED)
A
YED < 0. Demand falls as income rises. E.g. supermarket coffee.
7
Q
Luxury Good (YED)
A
YED > 1. Demand increases more than income. E.g. Ferrari.
8
Q
Necessities (YED)
A
YED between 0 and 1. Demand increases less than proportionately with income.
9
Q
Normal Goods (YED)
A
Demand increases as income rises; includes luxury goods.
10
Q
State PESTLE
A
Political, Economic, Social, Technological, Legal, Environmental.
11
Q
Example of POLITICAL external environment
A
Government decisions / laws.
12
Q
Example of ECONOMIC external environment
A
Interest rates, exchange rates.
13
Q
Example of SOCIAL external environment
A
Demographics, trends, pressure groups.
14
Q
Example of TECHNOLOGICAL external environment
A
Robotics, new/disruptive tech.
15
Q
Define disruptive technology
A
Innovation altering industry/consumer operations significantly.
16
Q
Example of LEGAL external environment
A
Employment law, minimum wage, health & safety.
17
Q
Example of ETHICAL/ENVIRONMENTAL external environment
A
Pollution, sustainability, ethical sourcing.
18
Q
What is a sustainable business?
A
One with minimal negative or positive environmental impact.
19
Q
External factors affecting level of demand
A
Prices & incomes, tastes, competition, demographic/tech changes, seasons, government.
20
Q
Define ‘marketing objectives’
A
Business aims from marketing activities.
21
Q
Internal influences on marketing objectives
A
Corporate objectives, operations, finances, management style, product availability.
22
Q
External influences on marketing objectives
A
Economy, market dynamics, tech changes, social/political shifts.
23
Q
Define Sampling
A
Getting opinions from specific group samples.
24
Q
How to lower margin of error in sampling?
A
Increase sample size.
25
Define cluster sampling
Sample taken from defined demographic groups (clusters).
26
Advantages of cluster sampling
Quick, face-to-face effective, doesn’t need full population.
27
Disadvantages of cluster sampling
Expensive for large clusters, risk of error.
28
Define convenience sampling
Volunteers used for ease.
29
Advantages of convenience sampling
Readily available subjects, quick data collection.
30
Disadvantages of convenience sampling
Bias, unrepresentative, relies on volunteers.
31
Define judgement sampling
Non-random, deliberate choice of sample.
32
Advantages of judgement sampling
Direct targeting, good for case studies.
33
Disadvantages of judgement sampling
Bias, small size, not generalizable.
34
Define quota sampling
Stratified sampling to represent overall population; very specific.
35
Advantages of quota sampling
Quick, accurate, convenient.
36
Disadvantages of quota sampling
Non-random, bias, needs knowledge of population.
37
Define systematic sampling
Select sample at fixed intervals after a random start.
38
Advantage of systematic sampling
Even distribution.
39
Disadvantages of systematic sampling
Costly, time-consuming.
40
Conducting systematic sampling
list, pick start point, select at interval, repeat.
41
Define test marketing
Limited release to part of target market to assess viability.
42
Aim of test marketing
Reduce failure risk, optimize marketing mix.
43
Advantages of test marketing
Real data, adjust before full launch, lowers risk.
44
Disadvantages of test marketing
Alert competitors, delays, cost, may not reflect full market.
45
Define 'moving average'
Smooths data to show trend, removes fluctuations.
46
Advantage of moving averages
Simplifies data, helps extrapolate.
47
Define 'extrapolation'
Forecasting future trends using past data.
48
Advantages of extrapolation
Simple, fast, cost-effective if trend stable.
49
Disadvantages of extrapolation
Assumes trend continues, ignores qualitative changes.
50
Define correlation
Strength of relationship between variables.
51
Define dependent variable
Variable that changes based on another.
52
Define independent variable
Variable that does not depend on another.
53
Scatter graph axis for correlation
X = Independent, Y = Dependent.
54
Types of correlation
Positive, negative, none.
55
Positive correlation
Both variables increase together.
56
Negative correlation
One increases, the other decreases.
57
Strong correlation
Tight data clustering.
58
Weak correlation
Data spread widely.
59
Example of price inelastic product
Petrol – essential.
60
61
62
Define market segmentation
Dividing the market into groups based on similar needs or characteristics.
63
Define targeting
Choosing which market segment to focus marketing efforts on.
64
Define positioning
How a product is perceived in the mind of the consumer relative to competitors.
65
Positioning strategies
More for less, more for more, more for same, less for less.
66
Define market mapping
Graphically plotting products/brands to identify market positioning and gaps.
67
Advantages of market mapping
Identifies gaps, analyzes competition, promotes research.
68
Disadvantages of market mapping
Gaps may not mean demand; based on opinions, may be biased.
69
What is the marketing mix?
The 7 P’s: Product, Price, Place, Promotion, People, Process, Physical Evidence.
70
Example of process (7P’s)
Contactless payments.
71
Example of people (7P’s)
Customer support.
72
Define ‘people’ (7P’s)
All involved in delivering a product/service, including employees.
73
Define ‘physical environment’ (7P’s)
The setting and physical cues that support product delivery (e.g., store layout).
74
Example of physical environment
Website layout, in-store decor.
75
Define process (7P’s)
Systems used to deliver products to customers.
76
What is the Boston Matrix?
Tool to analyze product portfolio by market growth and share.
77
Why is the Boston Matrix useful?
Helps allocate investment.
78
Four quadrants of the Boston Matrix
Question Mark, Star, Cash Cow, Dog.
79
Axes of Boston Matrix
Y = Market Growth, X = Market Share.
80
Rising Star strategy
Invest to maintain/build share.
81
Question Mark strategy
Selectively invest; potential to become a star.
82
Cash Cow strategy
Milk profits; defend market share.
83
Dog strategy
Divest or discontinue.
84
Advantages of Boston Matrix
Easy visual tool; free; supports product analysis.
85
Criticisms of Boston Matrix
Ignores other factors; snapshot only; sales ≠ success.
86
Difference between Product Life Cycle (PLC) and Boston Matrix
PLC: product focus; Boston: portfolio focus, cash flow emphasis.
87
PLC stages
Development, Introduction, Growth, Maturity, Extension, Decline.
88
Introduction stage strategy
High promotion, skimming/penetration pricing.
89
Growth stage features
Rising sales, market acceptance, economies of scale.
90
Maturity stage strategies
Differentiate, defend position, reduce costs.
91
Extension stage strategies
Reposition, adapt 7Ps, attract new users.
92
Decline stage characteristics
Falling sales, saturation, high unit costs.
93
Why products enter decline
Obsolescence, tech changes, poor management, competition.
94
Example of avoiding decline
Netflix – pivoted from DVD to streaming.
95
Ways to extend PLC
Advertising, price cuts, new markets, innovation.
96
Development stage issues
High cost, no sales, high failure risk.
97
Reducing risk in development
Research, evaluations, cost control.
98
Factors influencing pricing decisions
Product life cycle, elasticity, costs, economy, competitors.
99
Define price skimming
High launch price to recoup costs quickly.
100
Define penetration pricing
Low launch price to gain market share.
101
Advantages of penetration pricing
Quick market entry, loyal base, low-cost focus.
102
Disadvantages of penetration pricing
Attracts bargain hunters, price wars, difficult to raise price.
103
Advantages of price skimming
High profit, early product testing, premium image.
104
Disadvantages of price skimming
Attracts competitors, delays growth, alienates buyers.
105
Define predatory pricing
Deliberate undercutting to remove competition (illegal).
106
Define competitive pricing
Set price at competitors’ level.
107
Define psychological pricing
Pricing below round numbers (e.g., £9.99).
108
Define loss leaders
Selling below cost to attract buyers to other products.
109
Define price discrimination
Charging different prices to different customers.
110
Define dynamic pricing
Prices change based on demand and competition.
111
Contextual example of dynamic pricing
Uber surge pricing during emergencies.
112
Define mass marketing
Selling to a wide audience with no specific segmentation.
113
Advantages of advertising
Wide coverage, brand loyalty, increased sales, frequent exposure.
114
Disadvantages of advertising
Expensive, impersonal, potential deception, can lead to monopolies.
115
Advantages of personal selling
Two-way, personalized, persuasive, builds relationships.
116
Disadvantages of personal selling
Expensive, time-consuming, labor-intensive.
117
Define merchandising and give examples
Activities to boost sales, e.g., "Buy one get one free", branded items.
118
Define public relations
Managing relationships with the public, e.g., promoting social responsibility.
119
Define sponsorship and give examples
Payment for brand exposure, e.g., logos on football shirts.
120
Define direct marketing
Promotional material sent to individuals (mail, phone, email).
121
Advantages of direct marketing
Targeted, measurable, cost-effective, personalized.
122
Disadvantages of direct marketing
Variable response, can be seen as spam, costly databases.
123
Objective of distribution
Get products to the right place, time, and quantity.
124
4 distribution channels
Producer > Wholesaler > Retailer > Customer
Producer > Retailer > Customer
Producer > Customer
Producer > Agent > Customer
125
Advantages of direct selling
Full profit, direct control, customer convenience.
126
Disadvantages of direct selling
Miss wholesaler reach, increased cost, higher workload.
127
Define direct selling distribution (0-level)
Producer sells straight to customer.
128
Define indirect selling distribution (1-level)
Producer > Retailer > Customer.
129
Advantages of indirect selling
Access to large customer base, easier to find products.
130
Disadvantages of indirect selling
Reduced producer control, delayed delivery, weak brand loyalty.
131
Define direct selling through an agent (1-level)
Producer > Agent > Customer.
132
Example of agent
Kayak (flight booking), personal shoppers.
133
Define indirect selling (2-level)
Producer > Wholesaler > Retailer > Customer.
134
Define multi-channel distribution
Selling via more than one method (e.g., online & in-store).
135
Advantages of multi-channel distribution
Convenience, wider reach, backup options.
136
Disadvantages of multi-channel distribution
Complex management, channel conflicts.
137
Example of multi-channel distribution
Apple – stores, website, retail partners like Currys.
138
Advantages of using intermediaries
Easier for customers, builds relationships, more exposure.
139
Disadvantages of using intermediaries
Less control, more complexity, reduced profit.
140
Importance of placing product correctly
Visibility, convenience, reduces waste, increases engagement.
141
Define time series analysis
Analyzing data points over time to observe trends.
142
Advantages of time series analysis
Spot patterns, predict trends, identify outliers.
143
Disadvantages of time series analysis
Doesn’t include qualitative data, future may not reflect past.
144
Define income inelasticity
YED < 1. Demand is unresponsive to income change.
145
Define unitary price elasticity
Elasticity = 1. Demand changes in exact proportion to price.
146
How is unitary elasticity shown on a graph?
A curve facing right.
147
How is price elastic shown on a graph?
A steady (less steep) line.
148
How is price inelastic shown on a graph?
A steep line.
149
Factors affecting PED and YED
Brand strength, necessity, trends, availability, substitutes.
150
External influences on business activity
Competition, income, interest rates, demographics, environment.
151
Purpose of marketing
Understand the market, develop strategy, execute actions, support management.
152
Characteristics of effective marketing objectives
Aligned with business goals, focus effort, motivate team, track success.
153
External influences on marketing objectives
Pandemic, weather, interest rates, competition.
154
Link between technology and marketing objectives
Tech evolves quickly—marketing must adapt to stay relevant.
155
Link between competitors and marketing objectives
Competitor pricing can force changes to strategy or budget.
156
What is the Trade Description Act?
Law preventing misleading product/service promotion.
157
How does government interfere in business activity?
Laws (e.g., pricing, advertising), regulations.
158
Define market analysis
Observing trends to gain market insight and competitive edge.
159
Key questions in market analysis
Scale (local/national), channel (online/physical), target market?
160
How can a market be classified?
Geography, product type, seasonality, development stage, consumer type.
161
After identifying the market, what can marketing analyze?
Sales growth, market growth, share, mapping.
162
Define market share
Firm’s percentage of total market sales.
163
Market map layout
"+" shape graph with labeled axes.
164
Benefits of market maps
Understand customers, find gaps, analyze competition.
165
Advantages of primary market research
Personalized, reliable, current, owned by business.
166
Disadvantages of primary market research
Costly, time-consuming.
167
Advantages of secondary market research
Often free, accessible, wide range.
168
Disadvantages of secondary market research
May be outdated, not personalized, potentially unreliable.
169
Why use market research?
Understand customer needs, reduce failure risk, forecast trends, analyze competition.
170
Examples of primary market research
Questionnaires, interviews, surveys, focus groups.
171
Examples of internal secondary market research
Loyalty cards, sales reports, staff feedback, financial accounts, stock records.
172
Examples of external secondary market research
Government publications, trade magazines, agency reports.
173
Define simple random sampling
Randomly chosen names from a list (e.g., phonebook).
174
Define stratified sampling
Divide population by key traits, then sample proportionally.
175
Key considerations in sampling
Bias, leading questions, interviewer influence, sample representativeness.
176
Golden rules of sampling
Keep costs low, ensure representativeness, set error margins, adjust for product and company.
177
Define no correlation
No relationship between independent and dependent variables.
178
If strong correlation exists…
It can guide marketing predictions.
179
Define seasonal fluctuations
Repeat at regular intervals (e.g., annually).
180
Define random fluctuations
No clear pattern.
181
Use of time-series analysis
Forecasts, campaign performance, marketing links, identify success/failure.
182
Examples of elastic products
Cars, laptops, clothing.
183
Examples of inelastic products
Petrol, insulin, electricity.
184
Factors affecting elasticity of a product
Product type, availability, substitutes, customer choice.
185
Effect of petrol price decrease
Demand increases, revenue decreases.
186
Is petrol elastic or inelastic?
Inelastic.
187
Effect of petrol price increase
Demand may stay same or drop slightly; limited alternatives.
188
Define confidence intervals
Range within which a value likely lies, based on probability.
189
Common business confidence level
0.95
190
Why confidence intervals are useful
Helps estimate reliability, supports decisions, identifies risk margin.
191
[Income elasticity] What happens when income rises?
Demand rises.
192
[Income elasticity] What happens when income falls?
Demand falls.
193
What affects positive elasticity growth rate?
Product type and necessity level.
194
Define luxury goods
Income elastic, demand rises more than income. E.g., Gucci.
195
What happens to inferior goods when income rises?
Demand falls.
196
What happens to inferior goods when income falls?
Demand rises.
197
Ways to segment a market
Location, ethnicity, behavior, income, religion, age, gender.
198
Why segment a market?
Efficient marketing, reach new customers, avoid waste, identify opportunities.
199
Drawbacks of segmentation
May miss customers, requires research, segmentation may not be obvious.
200
Define a niche business
Focuses on a small, specialized market with little competition.
201
Influences on product positioning
Market state, company portfolio, product attributes.
202
Factors influencing integrated marketing mix
Competitors, target market, product type, scale, objectives, tech, law, finance.
203
Why update the marketing mix?
Stay competitive, align with strategy, react to market changes.
204
Example of adapting ‘product’ in the marketing mix
Improve product quality.
205
Example of adapting ‘place’ in the marketing mix
Reconsider distribution channels.
206
Example of adapting ‘promotion’ in the marketing mix
Adjust to social trends.
207
Example of adapting ‘process’ in the marketing mix
Allow online bookings.
208
Factors that may drive marketing mix changes
Brand position, market trends, competition, laws, finances.
209
Define product portfolio
All products a business offers.
210
3 types of consumer products
Convenience (daily), Shopping (occasional), Speciality (unique).
211
Define convenience products
Everyday items bought frequently.
212
Define shopping products
Bought less often, considered purchases.
213
Define speciality products
Unique products customers actively seek.
214
Define product portfolio analysis
Examining a firm’s full range of products to understand market positioning.
215
Advantage of broad product portfolio
Reach more markets and customers.
216
Disadvantage of broad product portfolio
Expensive, time-consuming, higher failure risk.
217
Advantage of products in different Boston Matrix quadrants
Supports development and market expansion.
218
How can managers use marketing/HR/operations data?
Ask questions, make informed decisions.
219
Examples of marketing data
Market growth, share, sales trends, portfolio status.
220
Examples of human resources data
Productivity, turnover, morale, recruitment, training.
221
Define mass markets
Large-scale markets with broad consumer base.
222
Difference between mass and niche markets
Mass = general; niche = focused, specific group.
223
What happens to inelastic products over time?
May become elastic if prices rise too high.
224
What does extrapolation use to predict trends?
Moving averages.
225
Assumptions of Boston Matrix
Marketing investment drives share; growth stage is ideal time to gain dominance.
226
Example of a cash cow product
Standard AirPods.
227
Ideal product portfolio for a business
Balanced – products in all categories except dogs.
228
Strategy word for a rising star
HOLD.
229
Strategy word for a problem child
BUILD.
230
Strategy word for a cash cow
MILK.
231
Strategy word for a dog
GET-RID.
232
Market conditions needed for price skimming
High brand/image, early adopters, low threat of competitors.
233
Example of price skimming
Apple iPhone.
234
What does penetration pricing work best on?
Price-sensitive products entering competitive markets.
