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Business Studies > Improving Marketing Performance (3) > Flashcards

Improving Marketing Performance (3) Flashcards

1
Q

Name the 3 measures of marketing

A
  • Market Growth
  • Market Size
  • Market Share
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2
Q

What does Market Size determine?

A

The potential number of customers

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3
Q

What is the formula for market share?

A

Business’ Revenue(sales)
—————————-x100
Entire Market’s Revenue(sales)

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4
Q

What is the formula for market growth?

A

New Market Size - Old Market Size
—————————————X100
Old Market Size

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5
Q

What is the formula for sales growth?

A

New Sales - Old Sales
————————X100
Old Sales

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6
Q

State the 6 main marketing objectives

A
  1. Sales Volume
  2. Brand Loyalty
  3. Market Growth
  4. Sales Value
  5. Sales Growth
  6. Market Share
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7
Q

Define Marketing

A

Maximising sales by anticipating the needs and wants of customers and finding the most profitable way to meet them.

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8
Q

Name 4 reasons as to why a business would conduct market research

A
  • Descriptive (Sale trends/ Whether objectives have been met)
  • Predictive (future trends/consumer behvaiour)
  • Explatory (Is there any way to improve customer experience/whether the consumers would be interested if the business invested in a new service)
  • Explanatory (why market share or repeat purchasing is low)
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9
Q

State 6 roles of marketing research

A
  • Aid in pricing strategies
  • Idenitfy trends in the market
  • Meeting customer needs
  • Customer feedback
  • Competitor analysis
  • Ideas for product development
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10
Q

What is primary market research?

A

Data collected first-hand by the business for a specific purpose

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11
Q

What is secondary market research?

A

Data that already exists and has been collected for a different reason.

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12
Q

What is sampling?

A

Choosing a small group of people that are representative of the market that you are targeting.

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13
Q

What are the 3 approaches to sampling?

A
  • Random
  • Quota
  • Stratified
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14
Q

State 3 benefits of sampling

A
  • Can be targeted
  • Avoid errors
  • Predict behaviours
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15
Q

State 3 drawbacks of sampling

A
  • Bias
  • Finding respondents
  • Can be out of date quickly
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16
Q

State 3 benefits of market mapping

A
  • Can show a gap in the market
  • Shows where the business should avoid (oversaturated)
  • Useful for analysing competitors
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17
Q

What is Extrapolation?

A

Extrapolation analyses past performance of a variable such as sales and extends the trend into the future.

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18
Q

Why is it important for businesses to understand correlation?

A

Allows them to understand the relationship between two factors, which could mean that they can manipulate them to achieve greater sales.

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19
Q

What is the drawback on Extrapolation?

A

Assumes that the future will be similar to the past which means that it may not be suitable for rapidly growing industries such as fashion and technology.

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20
Q

What does Elasticity measure?

A

How sensitive/responsive demand is to a change in price/ income.

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21
Q

State the benefit of knowing the Price Elasticity of Demand (PED)

A

Allow sthe business to anticipate how customers will react to a change in price.

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22
Q

What is the formula for PED?

A

% change in demand (increase=+) /
% change in price (decrease=-)

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23
Q

What does it mean if PED is higher than -1?

The % change in demand will be greater than the % change in price.

A

The demand is elastic

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24
Q

What does it mean if PED is between 0 and -1?

The % change in price will be greater than the % change in demand.

A

The demand is inelastic

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25
Q

What does it mean the business can do if the demand is inelastic?

A

They can charge the highest price possible.

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26
Q

State 4 factors affecting PED

A
  1. Strength of the brand
  2. Whether the product is a necessity (for example petrol, water, gas or electricty)
  3. Whether there are substitutes (can the product be replaced by something else)
  4. Whether similar products are available.
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27
Q

What is the formula for Income Elasticity for Demand (YED)?

A

% change in demand /
% change in price

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28
Q

If a product is greater than -1, what does this say about its price and income elasticity of demand and what type of product it is?

A
  1. Elastic for both income and price
  2. It is an inferior good
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29
Q

If a product falls between 0 and -1 or 0 and +1, what does it say about its price and income elasticity of demand and what type of product it is?

A
  1. Inelastic for price and income
  2. It is a necessary product
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30
Q

If a product is greater than +1, what does it say about its price and income elasticity of demand and what type of product it is?

A
  1. The product is elastic for income
  2. It is most likely a luxury good
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31
Q

Define Market Segmentation

A

The process of splitting the market into sub-groups of consumers with similar characteristics.

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32
Q

State 5 segments that must be considered when doing market segmentation

A
  1. Age
  2. Gender
  3. Geography
  4. Income
  5. Lifestyles
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33
Q

Define market targeting

A

Deciding which part of the market the business wants to operate in (the whole market or part of it)

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34
Q

What does it mean if a business chooses to target the** mass market**?

A

They are choosing to target the whole market

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35
Q

What does it mean if a business decides that they are going to target a niche market?

A

This means that the business would be targeting a segment of that market.

36
Q

How can a business choose to mass market>

2 choices

A
  1. One generic product
  2. One product that is adapted for each segment
37
Q

State 2 benefits of niche marketing

A
  1. Can meet customer needs better =higher level of customer satisfaction =higher brand loyalty =ability to charge higher prices =higher profit margin
  2. Less competition as the market is smaller=also limits the number of choices customers have
38
Q

State 3 drawbacks of niche marketing

A
  1. Limited opportunity for market growth due to the small size.
  2. High risk strategy as its reliant on the specific niche
  3. Miss out on economies of scale as the business most likely wont be purchasing in bulk.
39
Q

What is Market Positioning?

4 P’s

A
  1. Product
  2. Place
  3. Promotion
  4. Price
40
Q

State 2 benefits of mass marketing

A
  1. Lower need for market research as the whole market is being targeted
  2. Benefit from economies of scale as the business is most likely buying in bulk.
41
Q

State 2 drawbacks of mass marketing

A
  1. Large market may be saturated with competition, which may make it difficult for the business to increase market share
  2. Requires mass production to ensure that the business has enough output which can be expensive and needs finance
42
Q

What would you call a range of products?

A

Product Portfolio

43
Q

What does the Boston Matrix do?

A

Suggests what marketing decisions a business should take for their range of products

44
Q

What does the Boston Matrix advise businesses to do with their *question mark *products?

A

Invest- They should promote and improve the product to increase the high market share

45
Q

What does the Boston Matrix advise businesses to do with their cash cow products?

A

Milk- Use the profit to invest in other products but don’t spend too much as the sales are unlikely to grow significantly.

46
Q

What does the Boston Matrix advise businesses to do with their *star *products?

A

Support-Use product life extensions to keep market share high

47
Q

What does the Boston Matrix advise businesses to dowith their problem dog products?

A

Disinvest-Withdraw or keep product as it is but do not spend any more moeny on it

48
Q

What are the axis for the Boston Matrix Model?

A
  1. Market Share
  2. Market Growth
49
Q

State 2 benefits of the Boston Matrix

A
  1. Shows the business whether their portfolio is balanced
  2. Suggests strategies for each of the 4 different categories
50
Q

State 2 drawbacks of the Boston Matrix

A
  1. Does not account for any external factors
  2. High market share does not always lead in profits
51
Q

Name the 2 ways of product development

A
  1. New products
  2. Modifying existing products
52
Q

State 3 ways of modifying existing products

A
  1. Repackaging
  2. Quality improvements
  3. Performance improvements
53
Q

What are the axis for the product life cycle graph?

A
  1. Sales volume
  2. Time
54
Q

How many stages are there in the product life cycle?

A

5

55
Q

What is the first stage of the product life cycle and explain it

A

*Research and development = Market research is carried out and the idea for the prodcut is developed, no sales yet as the product isn’t available yet.

56
Q

What is the second stage of the product life cycle and explain it

A
  • Introduction/Launch = Sales start slowly as consumers are only starting to learn about the product and the business will need to invest in promotion.
57
Q

What is the third stage of the product life cycle and explain it

A
  • Growth = Sales are accelerating fast as people are beginning to buy more of it. At this stage, the business should start breaking even and starting to make a profit
58
Q

What is the fourth stage of the product life cycle and explain it

A
  • Maturity = Sales begin to slow down which could be due to a competitor releasing something similar. This is the best time to implement an extension strategy
59
Q

What is the final stage of the prodcut life cycle and explain it

A
  • Decline = Sales begin to fall and this is when the business should decide whether to invest in marketing to boost the sales or whether to withdraw the product
60
Q

State 5 ways a business could extend the life of a product

A
  1. Product improvement or redesign
  2. Packaging
  3. Advertising campaign
  4. Price promotion (reduced price)
  5. Find a new market
61
Q

State 3 benefits of the product life cycle graph

A
  1. Tracks sales to show how the product is doing
  2. Prompts extension strategies
  3. Helps managers plan their marketing activities
62
Q

State 2 drawbacks of the product life cycle graph

A
  1. Does not explain the change in sales
  2. Not always clear where the product is
63
Q

State 2 pricing strategies for new products or services

A
  1. Price Skimming
  2. Price Penetration
64
Q

What is Price Skimming?

A

Charging a higher price upon the release of the product to maximise sales which can allow the business to make up on its research and development costs

65
Q

What is the risk with price skimming?

A

If a competitor releases a product at the same time for a cheaper price, this could result in a significant loss in sales

66
Q

What is Price Penetration?

A

When a business charges a low price as a way to grab a consumer’s attention and quickly gain market share

67
Q

What is the risk with price penetration?

A

If other businesses choose to charge low prices too, then there might be a price war which isn’t good for anyone except the consumer.

68
Q

What is dynamic pricing?

A

A pricing strategy where businesses set flexible prices for products base don the current market demands.

69
Q

What are 2 pricing strategies that business would use for an existing product?

A
  1. Competitive Pricing
  2. Predatory Pricing
70
Q

What is Competitive Pricing?

A

A price leader will set a price for a product/service and other businesses will follow

71
Q

What is a distribution channel?

A

A flow of organisations that connect a product from producer to consumer.

72
Q

What is meant by a short distribution channel?

A

Only involves 2 organisations, which are the producer and the consumer

73
Q

What is meant by a long distribution channel?

A

Involves the producer, consumer and several intermediaries along the way such as wholesalers or retailers

74
Q

What is multi-channel distribution?

A

When a business uses more than one distribution network such selling to retailers, online stores and their own stores

75
Q

State 2 benefits of a multi-channel distribution network

A
  1. Higher revenues as it acomes in handy in situations where if retailers run out then customers can buy online.
  2. Makes the product convenient for the consumer as its easily accesible, thus increasing the chances of purchase
76
Q

State 2 drawbacks of a multi-channel distribution network

A
  1. Potential for channle conflict as the direct channel may have to compete with retailers
  2. Danger that pricing strategy can become confused in the eyes of the customer
77
Q

What factors determine the choice and length of distribution?

4 factors + questions

A
  1. The nature of the product (if customised then a direct approach would work best)
  2. The market (does it involve selling overseas?)
  3. The business (can it afford an in-house sales force)
  4. Legal issues (are there limitations on sale)
78
Q

What does ‘People’ mean in the marketing mix?

A

The employees and whether they are trained well enough to give good customer service and their responsiveness

79
Q

What does ‘Process’ mean in the marketing mix?

A

This involves anything to do with customer experience therefore;
* shopping/browsing experience
* after sales communication

80
Q

What does ‘Physical’ mean in the marketing mix?

A

The placement of the business is very important, for example, a luxury business would find more success in a high street rather than next to an abandoned garage.

81
Q

Give 3 examples of secondary market research

A
  1. Internet
  2. Market Reports
  3. Government Reports
82
Q

Give 3 examples of primary market research

A
  1. Focus Group
  2. Survey
  3. Observations
83
Q

What is an early adopter?

A

A type of consumer who is willing to pay a premium price in order to be the first to have the product.

84
Q

State 3 benefits of e-commerce

A
  1. Open 24/7 and 365 days
  2. Access to much larger national/international market
  3. Can avoid costs such as business rates and high street rent
85
Q

State 3 drawbacks of e-commerce

A
  1. Security issues with personal data
  2. Subcontracting delivery costs
  3. Low barrier of entry as anyone can set up
86
Q

State 3 ways a business can promote its product

A
  1. Advertising
  2. Sponsorship
  3. Direct selling

Business Studies (4 decks)

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