3.3 Marketing Flashcards

Question

Benefits of market segmentation

Answer 1

-There are a number of benefits for a firm that uses market segmentation as part of its market research. -Advertising can be targeted at specific market segments so that advertising spend is more effective -The most profitable and least profitable customers can be identified -Least profitable markets can be avoided -It becomes easier to identify new products -It helps firms improve existing products and customer service.

Answer 2

-Targeting is the process of deciding which segment of the market to focus on -This will be influenced by: -Mission and objectives -Perceived level of demand -Degree of competition -Nature of the product -Understanding of the needs and wants of a specific segment -Targeting may include niche and mass marketing. -Niche marketing is when a firm targets a small subsection or previously unexploited gap in a larger market. -Niche marketing may give a business first mover advantage and allow them to charge premium price. -Mass marketing is when a firm targets a whole of a market rather than a particular segment -Mass marketing can give a business a high volume of sales but often at a lower price.

Answer 3

-Where a product is placed in the market relative to its competitors -Positioning can be achieved by changing elements of the marketing mix to meet the needs of the target market. -Influences on positioning include: -Internal constraints e.g budgets -Internal strengths e.g creativity and innovation -Market conditions e.g degree of competition -External environment e.g state of the economy.

Answer 4

-The marketing mix is the combination of elements through which a firm achieves its marketing objectives -Product -Promotion -Price -Place -People -Process -Physical environment

Answer 5

-Product is the goods and services that a firm provides. -Product will be made up of core features and functions as well as additional aspects that can sway consumer behaviour e.g brand or guarantees. -Goods are physical or tangible products e.g a car or tv -Services are non physical or intangible e.g financial consultancy or teaching. -Businesses will normally have a range of products in their portfolio.

Answer 6

-Promotion is the activities designed to communicate with the market thereby increasing visibility and sales of a product. -Firms use different promotional strategies to make their products more widely known to other businesses and the general public e.g branding, advertising, Sponsorship

Answer 7

-Price is the amount of money that the customer has to pay to receive the good or service -Firms use different pricing strategies to price their products, taking into account a number of factors such as market research, competitors’ prices and the state of the economy -Price can also be changed as part of a promotional campaign. -Pricing decisions include: -Penetration pricing -Price skimming -Dynamic pricing

Answer 8

-Place defines both the physical location where a product is available as well as the distribution channel it has traveled through to get from the manufacturer to the customer. -Place can be a physical market where buyers and sellers meet face to face or a virtual location i.e over the internet -Increasingly firms are adopting a multi channel approach to place.

Answer 9

-People are the employees involved in dealing with customers before, during and after a sale. -Process is the steps a customer goes through to actually complete a transaction. -Physical environment is the design and features of the actual place where a transaction takes place.

Answer 10

-There are a number of factors that might influence the marketing mix for a firm: -Industrial markets are where businesses are selling to other businesses(B2B) -The technical specification of the product and service provided by as sales person or account manager is likely to be more important than the physical environment. -Consumer markets are where businesses are selling to the public(B2C -The product and the price may be seen as of equal importance to the physical environment but more important than place e.g does it matter what channels the product went through to reach the consumer

Answer 11

-There are a number of factors that might influence the marketing mix for a firm: -Convenience products are ones where the ease with which a consumer can get the product is a key priority. -Likely to be everyday items such as bread and potatoes -Customers may pay a higher price as a result of the convenience e.g if buying from a corner shop to save travelling time -Shopping products are ones where the consumer does not rush into the purchase but compares different options weighing up the strengths and weaknesses of each option before reaching a decision. -Often items that have an element of emotional attachment when buying and sometimes irrational behaviour e.g gifts or fashion -Customers may be influenced more by the product and the physical environment than the price -Specialty products are ones that a customer will spend time thinking about and often researching before buying. -These are likely to be infrequent purchases where the product is viewed as a luxury or a treat e.g an expensive item of jewellery or a designer label.

Answer 12

-Market research findings will inform elements of the marketing mix. -Target market that the product is aimed at -Positioning relative to competitiors -Internal constraints e.g budgets, expertise, and capacity -External influences including the actions of competitors and the state of the economy. -The marketing mix of a business is dynamic I.e it changed over time. As the influences change the business will have to respond by changing elements of the mix.

Answer 13

-Product portfolio analysis looks at the range of products and brands that a firm has under its control. -A businesses product range is called it’s products portfolio. -This type of analysis can help a firm identify where every single one of its products is positioned in the market.

Answer 14

-One technique used to analyse a business’ product portfolio is the Boston matrix. -This considers each product within the portfolio in relation to its market share and the rate of market growth. -The matrix consists of 4 quadrants: -High market share, Low Market growth -High market share, High Market growth -Low market share, High Market growth -Low market share, Low Market growth

Answer 15

-High market share in a low growth market. -These are established products -The products made through these products can be used to finance other products such as rising stars -Firms will want to establish as many cash cows as possible. -With low market growth there is likely to be less competition from new firms entering the market, therefore firms can spend less on advertising -A product is called a cash cow because a firm can “milk” the product to finance other areas of the business.

Answer 16

-High market share in a high growth market -These products enjoy increasing sales revenue -However, because the market is growing other firms are entering the market with similar products, therefore there will be fierce competition between these firms. -There is usually heavy promotional spending and increased capital investment in order to increase capacity. -Cash flow can often be negative at first -Rising are often funded from cash cows -It is hoped that a star can go on to become a cash cow but many stars eventually will become dogs.

Answer 17

-Low Market share in a high market -With growth in the market a product can be very successful if there is enough demand. -However, some products are unsuccessful and the firm will have to decide whether to persevere with the product or discontinue it. -A Problem Child or question mark, will require a lot of attention, particularly in the form of marketing. -Nurturing the problem child to help it achieve its potential will cost the firm time and money. -If sales of the product can be increased there is the opportunity for increased profits in the future and the product can be turned into a cash cow.

Answer 18

-Low market share in a low growth market -Dogs are unlikely to be kept on by a company -With little growth in the market and little market share the company might see little scope for future profits. -This does not always mean that the company will discontinue the product, if there is a market, then some products can still be profitable. -However, when a firm looks at its range of products it is more likely to concentrate on cash cows and rising stars rather than dogs.

Answer 19

-Product life cycle is a technique used to track the stages a product goes through during its life -It tracks sales over time from the development stage of a product through launch and until it is removed from the market. -Although a product life cycle relates to just one product business will want to have products at different stages -For example the revenue from a product that has reached maturity could be used to help develop a new product.

Answer 20

1. Development- Negative cash flow due to market research and Research and Development (R&D). No sales revenue before launch 2. Introduction- Production and promotion costs can be high 3. Growth- Sales revenue increased but as more units are sold production costs also increase. However, there will be economies of scale 4. Maturity- Sales stabilise and the product acts as a cash cow 5. Decline- at some point the product will start to lose sales. 6. Extension strategies- many products are adapted and given a new lease of life.

Answer 21

-NPD is the process of bringing a new product or service to the market. The process involves: 1. Generating ideas through different methods e.g brainstorming 2. Screening the ideas to come up with a specific idea 3. Development and testing of the concept 4. Analysis of costs, sales forecasts and likely profits. 5. Market testing of the concept 6. Product launch

Answer 22

-Advances in technology have seen incredible changes in a range of industries in the past 30 years. The internet and mobile phones have made communications and the exchange of information quick, easy and cheap. Robotics, new stock control systems and the micro chip have revolutionised manufacturing -New technology has: -Brought economies of scale to businesses -Made the world a global market through communications systems -Seen the rapid development of both new and innovative products

Answer 23

-Firms are now faced with increasingly competitive markets. Not only are uk firms competing against each other but they are now also competing against firms from all over the globe. -Firms keeps a close eye on competitors’ actions and either respond to moves by their competitors or they try to be proactive and bring out new products before their Competitors do.

Answer 24

- The entrepreneurial skills of managers and owners - The managers and owners of business are vitally important if the firm is to develop a range of new ideas and products. It is the owners and managers that will: - Be able to see the opportunities for new products that might arise within their markets. - Provide the funding that will be required for firms if they are to have resources that are required in order to develop the new products - Provide the inspiration and motivation for other members of the organisation so that all staff are engaged in the process of identifying new ideas that might lead to new products.

Answer 25

-Price penetration involves setting a low initial price for a new product in order to get a foothold in the market and gain market share. -May be a suitable pricing strategy for a product in a mass market -A firm will release a new product at a low price with the aim of enticing people to buy -The aim is to gain an early customer base -Once the product has been launched and built up a customer base the firm may raise the price -Likely to be used with a price elastic product.

Answer 26

-Price skimming involves setting a high initial price for a new product in order to recoup costs -When a firm releases a new product it often charges a high price targeting a segment of the market known as “early adopters” -These are customers who must have the product as soon as it is launched and are prepared to pay high prices to get it. -Firms often base their initial promotional campaign around this idea, trying to creat a “must have” mentality amongst their target market -Once this market has been “skimmed off” the company lower price.

Answer 27

-Prices change frequently and quickly in response to change in demand. -At times of peak demand prices will go up and vice versa. -Often used by businesses with set capacity e.g an airline so as the plane reaches full capacity prices will start to rise. -Dynamic pricing is made possible by technology that tracks demand and levels of interest.

Answer 28

-ProMotion- The component of the marketing mix that informs and persuades customers about the product in order to sell that product. ProMotion is designed to create Awareness, Interest, Desire and Action (AIDA) -Promotional Mix- The combination of promotional activities that a firm uses in order to create consumer awareness and generate sales. A Firm will look at its promotional mix in order to increase the sales of its products. -Branding -Merchandising -Sales Promotion -Direct Selling -Advertising -Public Relations

Answer 29

-Promotional decisions are influenced by a number of factors including: -The segmentation, targeting and positioning process. -Will the message appeal to the target market? -Does the promotion support the rest of the marketing mix and correctly position the product relative to competitiors -Internal constraints e.g the size of the promotional budget or the firms ethical objectives -External influences -Technology -Competitors’ actions -Environmental issues

Answer 30

-A Promotional method that involves the creation of an identity for the business that distinguishes that firm and its products from other firms -Branding can add value to a product allowing firms to charge higher prices -Ultimately leads to brand loyalty whereby customers will continue to buy products from that firm. -Organisations spend enormous amounts of time and money branding their company and products

Answer 31

-Relationship marketing focuses on building a longer term relationship with valued customers rather than focussing on short term sales -Builds brand loyalty -Encourages an emotional attachment to the brand -The business may benefit in the long run by word of mouth promotions -In industry markets this is often developed when an accounts manager is responsible for key clients who they build a bond with

Answer 32

-Public relations (PR) involves communicating with the media such as newspapers, television and radio in order to get favourable publicity for the organisation. -Merchandising is the way in which a firm promotes its product at Point of Sale (POS). Plenty of thought I’d put into the visual display of a product and the way that the product is presented within the selling location. -Sales Promotions are short term offers used by firms in order to increase sales for their products. -Advertising occurs when firms pay for the promotion of their product through the main media such as television, radio and the press. This is known as ‘above the line, ProMotion.

Answer 33

Developments in technology are affecting the promotional activities of business, this includes: -Social media -The use of virtual communities to communicate with actual and potential customers -Viral Marketing -Use of social media to encourage the spread of promotional activities and increase brand awareness -Uses blogs and online forums

Answer 34

-Place defines both the physical location where a product is available as well as the distribution channel it has travelled through to get from the manufacturer to the customer. -Place can be a physical market where buyers and sellers meet face to face or a virtual location. I.e over the internet. -Increasingly firms are adopting a multi-channel approach to place

Answer 35

-Place is the term given to distribution. -Distribution is the process of getting the firms product to the market. -Distribution channels are the routes to market that a product takes from producers to final customer -There are a number of distribution channels available to firms: -Short distribution channels are where the producer sells either directly to the customer or through a retailer. -Long distribution channels are where there are more than one intermediary (middle person) between the producer and the customer.

Answer 36

-Producers can use direct selling whereby they sell directly to the final consumer -Often, producers use retailers who sell products on to the general public -Wholesalers buy large quantities of supplies from producers and sell them on in smaller quantities. For example, a corner shop might go to a wholesaler to buy their products -Increasingly, firms are using e-commerce benefiting from the power of the internet to sell on their products. -Multi-channel distribution is when a firm chooses to use a combination of methods.

Answer 37

-Traditional (long) 1. Manufacturer 2.Wholesaler 3.Retailer 4.Consumer

Answer 38

-Modern (medium length) 1.Manufacturer 2.Retailer 3.Consumer

Answer 39

-Direct(Short) 1.Manufacturer 2.Consumer

Answer 40

-Distribution decisions will be affected by a number of factors including: -Type of product -The characteristics of the product need to be taken into account. For example Coca Cola do not ship their product to the uk from USA. Instead they ship over the syrup and the actual product is then made in the uk using British water. -Market -It is important that the customers being targeted can access the product. High streets are accessible by public transport so that all customers can shop, not just those with cars. -Is the businesses targeting a local, National or global market? -Quantity and frequency -If only a few low cost items are being delivered it would not be cost effective to send them hundreds of miles. If a product is regularly being delivered then a firm might invest in a delivery system. -Geographical location -How far is the target market from the firm? The firm will have to take into account the nearness of the market. Regional markets are far more accessible than international markets. -Cost -This is very important for a firm. An expensive distribution method will reduce the contribution being made to a firm’s profit. Therefore, the firm must ensure that the method is cost effective. -Degree of control -Businesses may want to protect their brand by limiting the spread of the product and keeping tight control of where it is available and at what price. -

Answer 41

-People are the employees involved in dealing with customers before, during and after sale. -Customer service is extremely important in today’s service sector in the UK -Staff must be appropriately trained, motivated and show good communication skills when dealing with customers. -People are an important aspect of all business, they are the ones interacting with the customer. -The role of people in the marketing mix will include: -Providing information -Supporting the customer in decision making. -Resolving problems -Completing the transaction

Answer 42

-Process is the steps a customer goes through to actually complete a transaction -The ease with which a transaction takes place will directly impact on customer’s perceptions of the business. -This can include: -The ease with which a product can be paid for e.g credit card transactions. -The effort involved e.g how many clicks when buying online. -The length of queues or number of people you have to transact with.

Answer 43

-Physical environment is the design and features of the actual place where a transaction takes place. -This can directly influence the customers’ shopping experience and therefore their level of satisfaction as well as willingness to return. -Aspects of physical environment include -Cleanliness -Design e.g ease of movement around the premises or ability to find what you are looking for -Facilities -Ambience

Answer 44

-An integrated marketing mix marketing mix means that the individual elements complement each other to communicate a coherent message to the public. -This is important in order to: -Give a clear message to the target market -Position the product effectively -Protect and promote the brand promise -Achieve marketing objective

Answer 45

-An integrated marketing mix will be influenced by: -The position in the product life cycle -A new product may be promoted heavily using both informative and persuasive techniques. -A product that has just reached maturity and facing decline may lower prices. -An extension strategy may see the product redesigned to freshen its appearance. -The Boston matrix -Changes may be made to the marketing mix of a problem child to help it become a star e.g change to the product or the way it’s promoted. -The type of product -A specialist product will have a physical environment that matches the quality of the product and is likely to have a premium price tag. -Marketing objectives -A business with an objective of increasing market share may alter its mix in order to try and achieve this. For example lowering price, depending upon the PED or bringing out and improved product. -The target market -Place may reflect geographic segmentation or the choice of media reflect the income of the customer e.g if the target market is socio-economic group A the business may choose to advertise in a broadsheet. -Competition -May need to respond to competitors’ actions for example if they lower price or increase promotional spend a business may wish to follow suit. -Positioning -Adapting the marketing mix to maintain the businesses position and brand perception relative to competitors.

Answer 46

-Digital marketing is the use of any form of digital technology to improve communications with customers. -Examples include: -Search engine optimisation(SEO) -Social media -Viral marketing -Digital display boards -SMS messages -Targeted feeds -Online advertising -E-commerce is when buyers and sellers meet to trade in a virtual market place e.g on the internet. -The value of digital marketing and e-commerce include: -Access to a global market -24/7 exposure and convenience -Greater analytics leading to more detailed data to inform decisions and target customers -Improved customer relations and understanding of buying habits -Greater two way communication -Greater word of mouth publicity through blogs and review sites

3.3 Marketing Flashcards

(70 cards)