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EM Business Strategy and Technology > 8. Strategies for products and markets > Flashcards

8. Strategies for products and markets Flashcards

1
Q

Describe a firm that has a marketing orientation.

A

A firm which has a marketing orientation will see the needs of consumers/customers as vital. If it develops and markets products to meet these demands (ie, to meet the critical success factors), certain structural characteristics will be apparent within the company, ie:

  1. Identifying customer/consumer needs - Marketing research
  2. Developing products to meet consumer/customer wants/needs - R&D/Production
  3. Determining the value of the product to the customers - Pricing
  4. Making the product available to the customer - Distribution
  5. Informing the customer/consumer of the product’s existence and persuading them to buy it - Promotion
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2
Q

What are Porter’s three generic strategies to create superior long-term profitability?

A
  1. Overall cost leadership
  2. Differentiation
  3. Focus - monopolise a niche segment
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3
Q

What are the 7Ps of the marketing mix?

A
  1. Product
  2. Price
  3. Promotion
  4. Place
  5. People
  6. Physical evidence
  7. Process
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4
Q

What are the four strategies presented in the Ansoff matrix?

A
  1. Market penetration
  2. Market development
  3. Product development
  4. Diversification
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5
Q

Define market segmentation.

A

The division of the market into homogeneous groups of potential customers who may be treated similarly for marketing purposes.

Alternatives are:

  1. Mass marketing
  2. Niche marketing
  3. Micro marketing
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6
Q

What are the benefits of market segmentation?

A
  1. Better understanding of customer needs –> Able to identify new marketing opportunities
  2. Specialists can be used for each segment
  3. Total marketing budget can be allocated proportionally to each segment –> optimises return on investment
  4. Can try to dominate particular segments, gaining a competitive advantage from a focus strategy
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7
Q

What are some examples of bases for segmentation?

A
  1. Type of customer, e.g., business, personal, own use, presents
  2. Different needs and tastes of the customer
  3. Location of the customer
  4. Spending potential of the customer
  5. Circumstances of the customer, e.g., loans targeted at new businesses or those with poor credit ratings
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8
Q

What does industrial segmentation include?

A

• Geographic: eg, as basis for sales force, distribution or because industries cluster.

• Purchasing characteristics: eg, order size, frequency of order.

• Benefit, eg, reliability, economy, durability, versatility, safety, value for money.

• Company type: eg, type of business, sole trader, partnership, limited company.

• Company size: eg, number of employees, profits, revenue.

• Technological eg, capable of/willing to buy online and to make use of developing technologies.

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9
Q

What does consumer segmentation include?

A

• Geographic: eg, as by country, region, city etc.

• Psychological: groups sharing common psychological characteristics, eg, old people may be security-oriented.

• Purchasing characteristics: eg, heavy user, medium user, low user.

• Benefit: eg, soap powders – smell, whiteness, economy, stain removal.

• Demographic: divides the market into groups based on such things as age, gender, family size, income, occupation, race etc.

• Technological: eg, whether the customer uses technology, eg, social media, mobile devices etc.

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10
Q

What is socio-economic grouping?

A

A - Upper middle class

B - Middle class

C1 - Lower middle class

C2 - Skilled working class

D - Working class

E - Subsistence

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11
Q

What is targeting?

A

Involves selecting the most attractive market segments

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12
Q

What does the attractiveness of a market segment depend on?

A
  1. Measurable: ability to forecast sales
  2. Accessible: ability to make, distribute and promote product
  3. Stable
  4. Substantial
  5. Defensible: there should be barriers to entry

Issues to consider include:

• How big is the market segment?
• How quickly is it growing?
• How many competitors are there and what is their market share?
• What are the main distribution channels?
• Are there any potential substitute products or services?
• What is the relative power of buyers/suppliers?
• What resources and competences does the company have?
• Can the segment be accessed through the deployment of internet technologies?

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13
Q

What can target strategies be?

A
  1. Single segment strategies (concentrated strategies): One market segment is served with one marketing mix – suitable for smaller organisations with limited resources.
  2. Selective specialisation (multi-segment strategies): Different market mixes are offered to different market segments.
  3. Product specialisation: The organisation specialises in a particular product and tailors it to suit different market segments.
  4. Market specialisation: The organisation specialises in serving a particular market segment and offers that segment an array of different products
  5. Full market coverage: The organisation attempts to serve the entire market.
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14
Q

Define positioning and re-positioning.

A

The overall location of a product or service in the buyer’s mind in relation to other competing products, services /brands.

Changing the identity of a product or service, relative to the identity of competing products or services, in the collective minds of the target market.

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15
Q

Define marketing research.

A

Is the systematic gathering, recording and analysing of information about problems relating to the marketing of goods and services.

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16
Q

Define market, product, price, promotional and distribution research.

A

Market research involves looking at specific markets, their size, market trends, information re segmentation, customer characteristics, customer needs and wants, demand curves, competitors’ products, etc.

Product research could include laboratory testing to analyse product safety, durability and shelf-life.

Pricing research could include attempts to generate more accurate figures to facilitate cost-plus pricing.

Promotional (‘market communications’) research might include contacting social media sites or the websites of online newspapers to determine how much they would charge for advertising.

Distribution research could include contacting potential retail outlets to determine what margins they would expect to make.

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17
Q

What are the various stages in marketing research?

A

• Defining (and locating) problems, setting objectives
• Developing hypotheses
• Research – desk and field research
• Data collection
• Analysis and interpretation
• Conclusions and recommendations

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18
Q

Define Desk research.

A

is the gathering and analysis of existing or secondary data. This may use existing company reports and other information from both internal and external sources.

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19
Q

What are the rules for successful desk research?

A

• Assume that the work has already been done – it just needs to be located.
• Think laterally and keep an open mind.
• Follow up leads, however vague.
• Get behind the published data, since often what is published is just a summary.
• Avoid saying ‘market research’.
• Avoid asking for ‘statistics’.
• Use internal sources of data as this is often available in organisational databases.

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20
Q

Define Field research.

A

Involves the collection of new (primary) information direct from respondents. As such it is usually more expensive than desk research and so is only performed if desk research fails to answer all questions asked.

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21
Q

What are the three basic types of field research?

A
  1. Opinion research
  2. Motivation research
  3. Measurement research

• Specific techniques
• In-depth interviews
• Group interviews
• Trial testing, eg, out of three chocolate bars which would you choose?
• Word association, eg, ‘lager drinkers’ – lout?
• Observation, eg, use cameras to determine how long on average it takes to serve customers in a restaurant.
• Questionnaires – very common.
• Online – internet surveys and focus groups.

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22
Q

What is the Net Promoter Score (NPS)?

A

This technique measures the likelihood of a customer promoting the company and its offering to others by scoring their response, usually on a scale of 1 to 10.

Customers who give a score of 9 or 10 are described as ‘promoters’, those giving a score of 7 or 8 are ‘neutral’, and those scoring between 1 and 6 are ‘detractors’.

The net promoter score (NPS) represents the percentage of customers who are promoters less the percentage of customers who are detractors.

23
Q

What are some factors that need to be considered when using sampling?

A
  1. Ideally one should choose random samples
  2. A popular alternative is quota sampling, where certain characteristics of the sample are predetermined.
  3. Opinion and motivation research tend to use small samples, whereas measurement research samples are much larger to facilitate more accurate extrapolation.
  4. In panelling the same sample is retained so that changes/trends in behaviour are easier to identify.
  5. Sampling may involve personal face-to-face contact (eg, door-to-door, intercepting people in shopping centres, etc), telephoning, mailshots and email shots or by putting questionnaires in magazines.
24
Q

Why is brand an asset?

A

Brands add value to products by making them recognisable and endowing them with associations attractive to the target segment.

25
Q

What are three essential features of branding?

A
  1. Name
  2. Livery: designs
  3. Associations and personality
26
Q

What are different branding policies that a company can adopt?

A
  1. Single company name
  2. Different brand names for each product
  3. Own branding
27
Q

What are the components of the brand positioning map?

A

• Cowboy brands: excessively priced brand for the quality of the product.
• Premium brands: top of the range quality, but high-priced.
• Bargain brands: good quality for a relatively low price.
• Economy brands: cheap brands, low-priced and low quality.

28
Q

Define brand equity

A

An intangible asset that adds value to a business through positive associations made by the consumer between the brand and benefits to themselves.

29
Q

What are the benefits of a strong brand?

A

• A more predictable income stream.
• Increased cash flow by increasing market share, reducing promotional costs and allowing premium pricing.
• Having an asset that can be sold or leased.
• Reduced marketing costs because of high brand awareness and loyalty.
• More power in bargaining with distributors and retailers.
• Higher prices accepted by the market because the brand has higher perceived quality.
• Potential for launching extensions easily because the brand has high credibility.
• Defence against price competition.

30
Q

What are some techniques that can be used to measure brand awareness of consumers?

A
  1. Surveys
  2. Monitoring web traffic
  3. Monitoring search volumes
  4. Social listening
31
Q

Define the marketing mix.

A

The set of controllable marketing variables that a firm blends to produce the response it wants in the target market.

32
Q

What are the extra Ps with particular emphasis in service marketing?

A
  1. People
  2. Processes
  3. Physical evidence
33
Q

What are some characteristics of service?

A
  1. Intangibility
  2. Inseparability: The delivery of the service occurs often at the same time it is consumed.
  3. Heterogeneity/variability
  4. Perishability
  5. Ownership
34
Q

What are the 7 Ps of the extended marketing mix?

A
  1. Product
  2. Price
  3. Place
  4. Promotion
  5. People
  6. Processes
  7. Physical evidence
35
Q

What are the components of a product?

A
  1. Basic (or core) - eg, a mobile phone
  2. Actual product - eg, the latest iPhone
  3. Augmented product - goods and services that provide additional value to the customer’s purchase. Eg the latest iPhone on a mobile contract, or an iPhone provided with insurance.
36
Q

What are factors encouraging standardisation?

A
  1. Economies of scale in production and marketing
  2. Consumer mobility
  3. Technology
  4. Image
37
Q

What are factors encouraging adaptation?

A
  1. Different usage conditions
  2. General market factors
  3. Government policies
  4. History
  5. Financial considerations
  6. Pressure
38
Q

What are typical components of a distribution channed?

A
  1. Retailers
  2. Wholesalers
  3. Distributors
  4. Agents
  5. Franchisees
  6. Direct selling
39
Q

What does the promotion mix consist of ?

A
  1. Advertising
  2. Sales promotion
  3. Public relations
  4. Personal selling
40
Q

Describe the pull and push effects.

A
  1. A pull effect is when consumers ask for the brand by name, for example because they have been given a money-off coupon or offered a free gift.
  2. A push effect is targeted on getting the company’s goods into the distribution network.
41
Q

What are 3 types of advertising?

A
  1. Information advertising
  2. Persuasive advertising
  3. Reminder advertising
42
Q

What are four Cs that should be balanced when pricing?

A
  1. Costs
  2. Customers
  3. Competitors
  4. Corporate objectives
43
Q

What are different methods of differential pricing?

A
  1. Market segment
  2. Product version
  3. Place
  4. Time
  5. Dynamic pricing
44
Q

What is the difference between market penetration and market skimming?

A

Market penetration pricing is a policy of low prices when the product is first launched to gain sufficient penetration into the market.

Market skimming: The aim of market skimming is to gain high unit profits very early on in the product’s life.

45
Q

What are 3 ways to perform cost-plus pricing?

A
  1. Marginal cost approach
  2. Full cost based
  3. Target return based
46
Q

What are the advantages of basing price on costs?

A
  1. Simplicity of operation for distributors
  2. Control of sales discounting
  3. Ease of budgeting
  4. Conformity with contracts
47
Q

What are the problems of basing price on costs?

A
  1. Ignores the effect of prices on volumes
  2. Ignores the effect of volumes on costs
  3. Is useless for very high fixed cost industries
  4. May not suit positioning of the product
  5. Ignores competitive conditions
  6. Does not consider the implications for sales of other products made by the firm
  7. Inherent problems in assessing costs
  8. Invites poor cost control
48
Q

What are the methods that can be used when basing prices on customer perceptions of value?

A
  1. Going rate approach
  2. Product comparison approach
  3. Factor pricing approach
  4. Economic value to customer approach
49
Q

What are some special pricing decisions?

A
  1. Promotional prices
  2. Everyday low prices
  3. Product line pricing
  4. Captive product pricing
  5. Predatory pricing
50
Q

What is transactions marketing?

A

management approach that focuses on the product, and develops marketing mixes for a product according to the needs customers satisfy when they buy it.

51
Q

What is relationship marketing?

A

Management process that seeks to attract, maintain and enhance customer relationships by focusing on the whole satisfaction experienced by the customer when dealing with the firm.

52
Q

What are the key characteristics of relationship marketing?

A
  1. Every customer is considered an individual person or unit.
  2. Activities of the company or organisation are predominantly directed towards existing customers.
  3. It is based on interactions and dialogues.
  4. The company or organisation is trying to achieve profitability through the decrease of customer turnover and the strengthening of customer relationships.
53
Q

What are the features of transactions marketing (mainly one-way communication)?

A
  1. Focus on single sale
  2. Orientation on product features
  3. Short time scale
  4. Little customer service
  5. Limited customer commitment
  6. Moderate customer contact
  7. Quality is the concern of production
54
Q

What are the features of Relationship marketing (mainly two-way communication)?

A
  1. Focus on customer retention
  2. Orientation on product benefits
  3. Long time scale
  4. High customer service
  5. High customer commitment
  6. High customer contact
  7. Quality is the concern of all

EM Business Strategy and Technology (18 decks)

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