Exam Flashcards
(56 cards)
provide an overview of marketing and the marketing process
Marketing is a philosophy or a way of doing business that puts the market — the customer, client, partner and society, and competitors — at the heart of all business decisions. The marketing process is cyclical in nature and involves understanding the market to create, communicate and deliver an offering for exchange. Marketers start by understanding the consumers, the market and how they are currently situated. Armed with this understanding, marketers are next tasked with creating solutions, communicating the offering to the market, and delivering it at a time and place that is convenient for the customer.
discuss the importance of ethics and corporate social responsibility in marketing
The essence of marketing is to develop mutually beneficial exchange. Exchange involves value creation for all parties to the exchange. Marketers must understand how customers perceive value. Value perceptions vary from one individual to another and they are ever changing. The customer is the focus of all marketing activities and successful marketers are those who view their products in terms of meeting customer needs and wants.
explain the elements of the marketing mix
A product is a bundle of attributes that when exchanged have value for customers, clients or society. A product can be a good, a service, an idea or even a person. Products cater to needs and wants. Needs are day-to-day survival requirements, while wants are desired but not required for survival.
Price is the amount of money a business demands in exchange for its offerings. Pricing is a complex marketing decision that must take account of many factors, including production, communication and distribution costs, required profitability, partners’ requirements, competitors’ prices, and customers’ willingness to pay. Marketers need to understand the relationship between price and quality to understand value from a customer’s point of view. Marketers need to understand what customers would like to receive and what they are prepared to give in return.
Distribution or place refers to the means of making the offering available to the target market at the right time and place while managing the costs of making the products available. Many businesses sell their products directly to the public, but distribution usually also involves partners such as wholesalers and retailers.
Promotion describes the marketing activities that make potential customers, partners and society aware of and attracted to the benefits of a business’s products. The product might be already established, modified, new, or information designed to persuade. Promotional activities include advertising, direct selling, sales promotions and loyalty schemes.
In the marketing framework, ‘people’ refers to all the people that may meet the customer and affect their experience of the product. Like the other factors, the people must be managed to maximise value for the customer.
Process refers to the systems used to create, communicate, deliver and exchange an offering.
Physical evidence refers to the tangible cues and physical environment a marketer can provide to help potential customers evaluate service quality.
discuss how marketing improves business performance, benefits society and contributes to quality of life
Organisations with a market orientation perform better than other organisations. Marketing creates employment and wealth for the benefit of individuals and society. It improves people’s quality of life through better products and the promotion of consumer and social welfare. An understanding of marketing helps you make better decisions as to the relative value of products offered to you. Marketing can be a rewarding career path. While it can be lucrative work, it requires dedication and effort. Marketers need good analytical, communication, and negotiation skills, the power of persuasion, and often a tertiary qualification in marketing or a related discipline.
describe the marketing environment and the purpose of environmental analysis
The marketing environment refers to all of the internal and external forces that affect a marketer’s ability to create, communicate, deliver and exchange offerings of value. Marketers seek to understand, respond to, and influence their environment. They use environmental analysis to break the marketing environment into smaller parts in order to better understand it
explain the factors at work in the organisation’s internal environment
The internal environment refers to its parts, people and processes. An organisation is able to directly control the factors in its internal environment. A thorough understanding of the internal environment ensures that marketers understand the organisation’s strengths and weaknesses, which positively and negatively affect the organisation’s ability to compete in the marketplace.
Different parts of organisations often have different goals. The most successful organisations manage to align the goals of each part of the organisation to the overall market orientation of the business. This is most likely to occur when each person and department understands their contribution and the contribution of other departments
understand the importance of the different micro-environmental factors
The micro environment consists of customers, clients, partners, competitors and other parties that make up the organisation’s industry. The organisation cannot directly control its micro environment, but it can exert some influence over it.
Marketers must understand and respond to the current and future needs and wants of their target market. They must understand how each of their partners’ processes work and how their partnerships benefit each party. They must also understand the risks involved in working with partners and the relative power balance between the organisation and each partner. Suppliers are a particularly crucial partner. Marketers must identify, assess, monitor and manage risks to supplies and risks to the price of supplies. To succeed, marketers must ensure their offerings provide their target market with greater value than their competitors’ offerings. Thus, marketers seek to understand their competitors’ marketing mix, sales volumes, sales trends, market share, staffing, sales per employee and employment trends. Marketers should analyse total budget competition, generic competition, product competition and brand competition
outline the different types of macro-environmental forces
The macro environment encompasses uncontrollable factors outside of the industry: political, economic, sociocultural, technological, environmental and legal forces. Political forces describe the influence of politics on marketing decisions. Economic forces affect how much money people and organisations can spend and how they choose to spend it. Sociocultural forces affect people’s attitudes, beliefs, behaviours, preferences, customs and lifestyles. Technological forces are those arising from the search for a better way to do things. Technology changes the expectations and72behaviours of customers and clients as well as how organisations work with their partners and within society. There is a wide range of environmental factors that companies need to be mindful of, including ecological and environmental aspects such as weather, climate and climate change. Laws and regulations are closely tied to politics and establish the rules under which organisations must conduct their activities. The most significant laws and regulations for marketers are related to privacy, fair trading, consumer safety, prices, contract terms and intellectual property
conduct a preliminary situation analysis
Situation analysis involves assessing an organisation’s current position and situation. Together with organisational objectives, situation analysis is used as the platform for marketing planning. Essentially, a marketing plan communicates how marketers plan to get from the current situation to where senior management thinks their organisation should be.
Marketing metrics are used to measure current performance and the outcomes of past activities. A SWOT analysis is used to identify strengths (those attributes of the organisation that help it achieve its objectives), weaknesses (those attributes of the organisation that hinder it in trying to achieve its objectives), opportunities (factors that are potentially helpful to achieving the organisation’s objectives) and threats (factors that are potentially harmful to the organisation’s efforts to achieve its objectives)
discuss the importance of market research as a basis for marketing decision making
Market research links customers, clients, partners and society at large with the marketer through information. Information obtained from market research — along with information from other sources — is used to inform marketing decisions on a wide range of issues, including those that are fundamental to the organisation’s marketing mix. The results of market research are fed into a marketing information system, which holds and organises all of the organisation’s marketing information.
In deciding to undertake a market research project, the organisation should first consider whether the market research will be relevant, timely, feasible given available resources, necessary, and result in sufficient benefits to justify the costs.
Market research must be conducted ethically, respecting the rights of clients, employers and research participants.
clearly define a research problem to guide a market research project, and prepare a research brief
Before beginning a market research project, it is crucial to know precisely what the research is intended to achieve. The question that the research is intended to answer is known as the ‘research problem’. As the research project proceeds and more information is gathered, the research problem may need to be redefined.
Whether the market research project is undertaken in-house or outsourced to a specialist provider, a market research brief should be prepared to guide the project. A market research brief specifies the research problem, the information required, the timeframe, the budget, and any other conditions relevant to the project.
outline the issues in research design, including the role of primary and secondary data, and the uses of quantitative and qualitative research
The research problem needs to be analysed in order to create a methodology that will provide an answer to the problem. This detailed methodology planned to answer the research problem is known as the ‘research design’.
Depending on the nature of the research problem, market research usually takes the form of exploratory research, descriptive research or causal research. Exploratory research is intended to gather more information about a loosely defined problem. Descriptive research is used to solve well-defined problem by discovering more about certain phenomena. Causal research tests whether a particular variable affects a specific outcome.
Market research can draw on two types of data. Secondary data is data that already exists. Primary data is collected specifically for the purposes of the current research project.
Research methods can be broadly classified as quantitative research or qualitative research. Quantitative research collects data that can be represented numerically and analysed using statistical techniques. Experimentation, observation and biometrics are among the quantitative research methods. The most commonly used quantitative research tool is the survey, with online being the most popular current form.
Qualitative research obtains rich, deep and detailed information and is often used when the market researcher needs to know about the beliefs and attitudes that underlie observable behaviour. Interviews and focus groups are among the most 109commonly used qualitative research methods, but they are time-consuming and expensive. Both can be conducted in person, over the phone or online.
Market research tries to find out about the population by studying a small part of it and then generalising the results. The smaller part is known as a ‘sample’. Probability sampling ensures every member of a population has a known chance of being selected in the sample that will be studied. Non-probability sampling provides no way of knowing the chance of a particular member of the population being chosen as part of the sample.
understand the key principles of data collection and analysis, and the subsequent reporting of market research findings to inform marketing decisions
Once a research project has been designed, it must be implemented in compliance with the design. This requires careful project management. Data must be collected, filtered and organised so that it can be efficiently analysed. Quantitative data can be statistically manipulated to identify trends and patterns in the data. Qualitative data can be reduced to allow statistical analysis, but much of the rich detail can be lost. Often qualitative data analysis leads to further research in the form of quantitative research.
Data analysis allows conclusions to be drawn and recommendations formulated. The findings and recommendations of the market research project should be presented in a concise and clear manner. The underlying detail should also be provided to support the recommendations.
The recommendations ultimately lead to a marketing decision, which in turn will lead to marketing outcomes. Ideally, the outcomes are a successful response to the research problem that triggered the market research process.
explain why marketers require a thorough understanding of consumer behaviour and its major influences
‘Consumer behaviour’ is the study of the behaviour of individuals and households who buy products for personal consumption. It forms the basis of an understanding of the reasons behind the decisions consumers make, which is central to creating an effective marketing mix. Consumer behaviour is influenced by situational factors, group factors and individual factors.
Situational factors are simply the circumstances in which a person finds themselves when making a consumption decision. They relate to the influence of physical, social, time, motivational and mood factors.
understand the major group factors that influence consumer behaviour
Group factors comprise cultural influences and social influences. Cultural influences affect behaviours that operate at the level of the whole society or of major groups within society, and include culture, subculture and social class. Culture is the system of knowledge, beliefs, values, rituals and artefacts by which a society or other large group defines itself. National cultures can be described according to Hofstede’s cultural dimensions: power distance, uncertainty avoidance, individualism, masculinity and long-term orientation. A subculture is a group of individuals who share common attitudes, values and behaviours that distinguish them from the broader culture in which they are immersed. A social class is a grouping defined by similar social ranking within the social hierarchy.
Social influences are those that impinge on the individual to behave in a way that reflects group norms. A reference group is any group to which an individual looks for guidance, including membership, aspirational and dissociative reference groups. Within a reference group, some individuals take on the role of opinion leader on issues about which they are particularly knowledgeable. Opinion leaders are influential over the attitudes and behaviours of other group members. Family influences are also important in consumer behaviour and many consumption decisions are traditionally made by particular members or combinations of members of the household.
analyse the major individual factors that influence consumer behaviour
Personal and psychological factors influence consumer behaviour independently of social circumstances. Personal characteristics include demographic, lifestyle and personality factors. Marketers consider all of them to have a close link to consumer behaviour, but it has proven notoriously difficult to demonstrate a reliable and predictable link between particular personal characteristics and consumer behaviour.
Psychological characteristics are internal factors that shape the thinking, aspirations, expectations and behaviours of the individual. They include motivation, which is the internal drive to satisfy unfulfilled needs. According to Maslow’s hierarchy of needs, individuals, generally, try to satisfy lower order needs such as food and sleep ahead of higher order needs such as learning. Another psychological characteristic is perception, which describes how an individual filters, organises and attributes meaning to external stimuli, including marketing communications. Beliefs and attitudes are also an important personal influence on consumer behaviour, as they 147determine the context in which product evaluations are made. Effective marketing needs to appeal to the cognitive, affective and behavioural components of consumer attitudes. A final personal influence is the way in which an individual learns. Marketers can ‘teach’ individuals to have particular awareness of and attitudes towards their products using cognitive and behavioural learning approaches.
explain the general steps in the consumer decision-making process
The consumer decision-making process typically comprises need/want recognition, information search, evaluation of options, purchase and post-purchase evaluation. These steps are common to most purchase decisions, but the extent to which each is used depends on the level of involvement in the purchase. Habitual purchases are made with little decision-making involvement; infrequent, but familiar, purchases are made with limited involvement; and rare, large, important or risky purchases are made with extensive involvement.
It is a common mistake for marketers to overlook the last stage of the decision-making process: post-purchase evaluation. It is after the purchase that the consumer can evaluate whether or not they made a wise choice. Effective marketers take steps to ensure they continue to build their relationship with consumers after the purchase to reduce cognitive dissonance (second thoughts about the purchase) and increase the likelihood of repeat purchase and brand loyalty in the future.
understand the objectives that guide pricing strategies
Price is a visible expression of the value of the product to be exchanged and enables buyers and sellers to negotiate and agree on that value. Pricing objectives are derived from the organisation’s broader marketing objectives. Pricing objectives tend to focus on the issues of profitability, long-term prosperity, market share and positioning. The pricing strategy and specific tactics an organisation chooses must comply with laws and regulations that govern issues such as misleading and deceptive conduct, price collusion, comparability of prices, clarity in pricing and price discrimination. Ultimately, pricing decisions must be based on an understanding of demand, costs and competition in order to deliver value to the customer and the marketer
analyse demand to inform the development of an appropriate pricing strategy
Demand is the relationship between the price of a particular product and the quantity of the product that consumers are willing to buy. Demand analysis is based on historical data, estimates of sales potential, and estimates of price–volume relationships and price sensitivity. The data enable the marketer to construct a demand curve. The traditional demand curve slopes downwards, indicating that as prices rise, quantity sold falls, and vice versa. Prestige products have a unique demand curve in which, up to a threshold point, increasing prices actually increases demand due to the perceived quality, prestige and exclusivity conveyed by the product’s price. The sensitivity of consumer demand to price changes is known as the price elasticity of demand. In instances of price elastic demand, a particular percentage change in price will cause a greater percentage change in quantity demanded. In price inelastic demand, a particular percentage change in price will cause a smaller percentage change in quantity demanded.
describe the principles of pricing based on cost and revenue analysis
Costs determine a price floor, below which the business cannot survive in the long term. It is crucial for marketers to understand the relationship between retail prices, sales volume, costs and ultimately profits. Break-even analysis estimates the volume of unit sales required to cover total costs. Marginal analysis determines the effect on costs and revenue when an organisation produces and sells one more unit of product. Cost-based pricing involves adding a percentage or dollar amount to the cost of a product in order to determine its selling price. Cost-plus pricing is used by producers when it is difficult to determine the costs of the product until it has been completed. In such cases, the seller adds their required profit margin as a dollar amount or percentage to the costs once the project is complete. Markup pricing is used by wholesalers and retailers and involves adding a percentage of their purchase cost to determine the resale price.
explain the role of competitive analysis in determining pricing
Price competition usually emerges when competitors’ offerings are not significantly differentiated in the minds of consumers. Price competition is undesirable from a seller’s point of view, unless the seller has a cost advantage through economies of scale in purchasing or low-cost production. Competition-based pricing is based on the prices charged by competitors or on the likely response of competitors to the organisation’s prices. When it is feasible, competition on factors other than price is preferable as it gives the organisation greater power to decide on the profit margin per unit sold. Most organisations seek to compete using a strategy of ‘differentiation’, which emphasises the uniqueness of the organisation’s products in terms of product quality, innovation, brand image, customer service, distribution coverage and local convenience.
appreciate the issues involved in pricing for business markets
Business-to-business marketing relationships tend to be close, long-term and formal. This leads to more formal pricing practices than those in consumer markets. At the same time, pricing is more complex in business markets — differences in the size of purchases, the frequency of purchases, costs involved in transport and other considerations often require sellers to adjust prices for individual customers and individual transactions.
understand how to manage prices as part of the marketing mix
Customer perceptions are subjective and particular to each individual, but it is important that marketers match pricing as closely as possible to customers’ expectations. These expectations are based partly on the customer’s internal and external reference prices. Tactics such as odd–even pricing, reference pricing, multiple-unit pricing and bundle pricing can be used to manage customer perceptions of value. In launching a new product, an organisation may choose a penetration pricing or price skimming strategy to maximise volume or margin respectively. For established products, an organisation may seek to implement differential pricing or promotional pricing. Pricing should always be consistent with the other elements of the marketing mix.
define ‘product’ and understand different ways to view and analyse products and product attributes
A product is a good, service or idea offered to the market for exchange. It can be tangible, intangible or a combination of both. Marketers can better understand and analyse products using the total product concept, which describes four levels of a product: core product, expected product, augmented product and potential product. Products can be classified as consumer products (products purchased by individuals to satisfy personal and household needs) and business products (products bought by an organisation to be used in its operations or in the production of its own products).
