Management of Marketing

Question 1

What is marketing segmentation?

Answer 1

When a business puts potential customers into groups based on specific criteria or characteristics.

Question 2

What are some criteria businesses use to segment the market?

Answer 2

-Age, e.g. 13-18 or over 55
-Gender, this is commonly used in cosmetic or clothes markets.
-Income level, consumers are put into groups depending on how much disposable income they have.
-Lifestyle/hobby, e.g. vegetarians or gamers.
-Religion/cultural beliefs.

Question 3

What is a target market?

Answer 3

After a business has segmented the market they then need to decide what group to aim their products or services towards. This is known as the target market. A companies target market will be at the heart of every marketing decision made. e.g. the target market for the online fashion retailer pretty little thing is woman aged 16-24.

Question 4

What are some benefits of target marketing?

Answer 4

-Products or services will be better suited to the target markets needs and wants, meaning better customer satisfaction.
-Businesses will sell their appropriate pricing that appeals to their target marketing, leading to an increase in sales.
-Businesses will sell their products in places where there target market shops, leading to an increase in sales.
-There is a decreased chance of products failure, meaning a business is less likely to waste investment.

Question 5

What is market research?

Answer 5

Market research is the process of gathering, recording and analysing data bout customers, competitors and market trends. Conducting market research allows businesses to make more informed decisions relating to the marketing of their product.

Question 6

What is market research used by a business for?

Answer 6

-Identifying what the target markets should be for their products or services.
-Finding what the target markets needs and wants are so as to design products that satisfy them.
-Finding out how much the target market is willing to pay for products, to set appropriate pricing.
-Gathering information about competitors to gain a competitive advantage.

Question 7

What are the types of market research

Answer 7

Field research - This involves a business gathering new information themselves using methods such as face-to-face interviews and focus groups. This collects primary information.

Desk research - Involves the use of pre-existing data that has been gathered by someone else. This type of research collects secondary information.

Question 8

State some advantages of field research.

Answer 8

-Data collected is brand new and up-to-date.
-Data is not available to competitors.
-The research is tailored to the specific requirements of a business meaning its highly relevant.

Question 9

What are some disadvantages of field research?

Answer 9

-It can be expensive compared to desk research.
-It can be time consuming meaning that decisions can’t be made quickly

Question 10

What are some methods of field research?

Answer 10

-Personal interview
-Telephone survey, interview over a telephone.
-Postal survey, questionnaire sent through the post.
-Online survey, questionnaire hosted online.
-Hall test, respondents are given a sample of a new product to test and give back feedback.
-Focus group, a group of volunteers from a target market are brought together to discuss a product.

Question 11

What are common sources of desk research used by businesses?

Answer 11

-Government reports and statistics.
-reports produced by market research companies such as Mintel.
-Competitors’ websites.
-Trade magazines and journals.
-Reputable newspapers.

Question 12

What are some advantages of desk research?

Answer 12

-Its relatively inexpensive way of gathering data.
-Its relatively quick to gather compared to field research, meaning that decisions can be made quickly.
-Large amounts of data and information is available at little to no cost.

Question 13

What are some disadvantages of desk research?

Answer 13

-Data gathered could be out of date. leading to poor decisions being made.
-The same information is also available to competitors.
-The info may contain bias.

Question 14

What is the marketing mix?

Answer 14

The marketing mix is the name given to the key decision-making areas required in the marketing of a product or service. The marketing mix is also referred to as the four P’s.

Question 15

What are the 4 P’s?

Answer 15

-Product
-Place
-Price
-Promotion
These aspects are brought together to successful market their product or service.

Question 16

What is the fist marketing decision that must be made?

Answer 16

What exactly is a business going to sell.

Question 17

What are the four distinct changes in the product life cycle?

Answer 17

-Introduction
-Growth
-Maturity
-Decline

Question 18

What happens in the introduction stage of the product life cycle?

Answer 18

-The product is first launched into the market.
-Sales are low and slow and few people are aware of the product.
-Heavy advertisement is required to make consumers aware of the product.
-Most products make a loss due to low sales and high advertising costs.

Question 19

What happens in the Growth stage of the product life cycle?

Answer 19

-Sales begin to rise quickly as more consumers become aware of and buy the new product.
-Heavy advertisement is still required.
-Most products begin to become profitable by the end of this stage.

Question 20

What happens in the maturity stage of the product life cycle?

Answer 20

-Product has been on the market for a while and has established a customer base.
-Sales of the product reach their peak.
-Because the product is well established less advertising is required.
-Due to high sales and reduction in advertisement costs, profits reach their peak.

Question 21

What happens in the decline stage of the product life cycle?

Answer 21

-Sales of the product fall quickly as the product has been on the market for a long time and newer more desirable products have been released.
-Profits fall due to increasing sales, the product will then be withdrawn from the market.

Question 22

What is branding?

Answer 22

A brand can be a name, symbol, logo, slogan or unique design that a business uses to give their products a strong identity and make them easily recognisable by consumers. Examples: Wedding dress/cake maker, hairdresser cutting customers hair.

Question 23

Advantages of job production?

Answer 23

-Products are fully bespoke to customers requirements, meaning very satisfied customers.
-Higher prices can be charged due to the unique nature of products.
-Workers are involved in all stages of making the product, meaning it will keep them busy and boost there morale.

Question 24

What are some disadvantages of branding?

Answer 24

-establishing a brand can be a very expensive and time consuming and expensive process.
-The entire brand could be damaged by one poor product in the range.
-Branding goods makes them easier to copy for counterfeiters.

Question 25

What is packing and what is it used for?

Answer 25

Packing is a necessary cost for all businesses selling products. Its used for many reasons: -Protecting products from being damaged during transportation. -Helping keep products fresh. -Providing legally required information, e.g. nutrition.

Question 26

How does packaging help in the marketing of a product?

Answer 26

-Packaging will be designed to reflect product branding, e.g. choice of colours and fonts. -Packaging will be designed to appeal to the target market, e.g. choice of images and materials.

Question 27

What are factors considered when setting a price?

Answer 27

-Cost of buying or producing a product. -Amount of profit to be made. -Price charged by competitors. -Quality of the product. -Price target market will pay. -Governments restrictions on pricing.

Question 28

State some long term pricing strategies.

Answer 28

-Premium high pricing, a business sets their price higher than competitors to give customers the idea that its better quality. -Low price, when businesses set their price lower than competitors. -Competitive pricing, when a business sets there price the same as competitors. -Cost plus pricing, putting the price of a product up a certain percentage on the price it cost to make ensuring profit on every product.

Question 29

What are some short term pricing strategies?

Answer 29

-Price skimming, the price is set high when the product is first launched, one there are no customers left willing to pay the price gets lowered. This process is then repeated. -Penetration pricing, setting the price low when its first launched. The low price attracts customers to establish a customer base, then the price is increased over time. -Promotional pricing, e.g. boxing day sales or BOGOF -Psychological pricing, pricing that makes the customer think they are getting a better deal than they are.

Question 30

What factors should be considered when choosing where to start up a business?

Answer 30

-Type of business, e.g. wind farms need to be in a rural windy area. -Location and competitors. -Cost of the premises. -Ability of labour in the area, are there enough people with the right skills to employ. -Transport links, how easily can customers use transport to get to your business. -Government incentives, some governments may offer grants to businesses that set up in specific areas.

Question 31

What is E-commerce?

Answer 31

E-commerce is the buying and selling of products and services via the internet.

Question 32

Advantages of e-commerce?

Answer 32

-Consumers from around the world can buy from the business. -Customers can buy at whatever time is most convenient to them. -Businesses don't need to pay rent on a shop to sell their products from. -Businesses can display an unlimited number of products.

Question 33

Disadvantages of e-commerce?

Answer 33

-Customers cant see or handle products before purchasing so customers are more likely to return products. -There are high initial costs in creating a high quality professional website. -

Question 34

What are the methods of distribution?

Answer 34

-Road -Rail -Sea -Air

Question 35

What is the purpose of promotion?

Answer 35

-To inform consumers that a product exists. -Provide consumers with information about a product. -Persuade customers to buy a product. -To convince consumers to buy from the business instead of from competitors.

Question 36

What are some methods of advertising. and what are advantages and disadvantages of each?

Answer 36

-TV Advantage: Potential to reach very large audiences. Demonstrations of the product can be shown. Disadvantages: Relatively expensive, modern technology and 'channel hopping' meaning people avoid watching adverts. -Newspapers Advantages: Consumers can cut adverts out to use for future reference, customers can be targeted through choice of newspaper. Disadvantages: Limited to only one text and image making it difficult to make adverts in newspapers memorable, newspapers contain many adverts making it difficult to stand out. -Billboards Advantages: Consumers will see the advert repeatedly, increasing the chances of them remembering it. Usually placed in busy areas meaning many will see it. Disadvantages: only contain a small amount of information and people usually pass by them quickly.Can become vandalised or damaged by weather. -Cinema Advantages: Advanced sound and screen technology makes adverts more engaging. There is a captive audience that will see the advert. -Internet adverts/banners placed at the top and sides of websites Advantages: Adverts can reach a global audience if consumers around the world visit the website. Can target specific market segments by their interests and the websites they use. Disadvantages: Consumers may ignore the advert if they are focused on the websites content. Hard to stand out from other adverts on the web. -SMS (Text messages sent to customers) Advantages: Cost effective as the text can me sent to a large number of consumers at the same time. Consumers receive the message instantly. -Disadvantages: Customers can become annoyed if they receive many SMS adverts. SMS adverts can only contain a very limited amount of information.

Question 37

What are some promotional strategies?

Answer 37

-Special Offers, when price is reduced for a short time to encourage increased sales of products, e.g. BOGOF of 20% off. -Free samples: Customers are given a free sample to see if they like a product or not. -Loyalty scheme: Involves customers collecting stamps or points from a business when they buy from them that goes towards products or discounts. -Competition: The customer is entered into a draw to win a prize, e.g. electronics or holidays. Celebrity endorsement: sponsoring a famous person to advertise a product.

Question 38

How should a business be ethical in their marketing?

Answer 38

They should: -Not intentionally mislead customers by making false claims about a product. -Ensure that adverts don't contain indecent or obscene content. -Don't include content that could offend consumers morale or cultural belief negatively. -Make sure adverts conform to discrimination legislation. -Ensure adverts comply to legislation regarding children's products.

Question 39

What are the uses of technology by the marketing function?

Answer 39

-Internet: E.g. selling goods on the internet, conducting market research, placing advert banners on websites. -Desktop publishing: Software used to make high-quality attractive adverts and promotional material. -E-mail: Send information about a new product to consumers. -Smartphone Making an app for customers to browse their product range. The app can send new offers of product advertisements to phones with the app through notifications. -Database A database can be used to store customers' details.

Question 40

Disadvantages of job production?

Answer 40

-Highly skilled workers will need paid higher wages. -Lead time tends to be slow compared to other methods of production. -A business will not be able to buy raw materials in bulk meaning it may miss out on discounts.

Question 41

What does batch production involve and what are some examples of batch production?

Answer 41

Batch production involves making products in small groups named batches. Products in each batch will be identical although each batch can be different.Products within a batch will go through the same stage of production together. Example: A bakery making a range of cakes and bread, food manufacturers making a variety of soups.

Question 42

Advantages of batch production?

Answer 42

-Allows a degree of customisation for the customer, this increases satisfaction. -Large amounts can be made. -Usually requires less skilled workers than job production, this reduces wage cost.

Question 43

Disadvantages of batch production?

Answer 43

-Equipment needs to be cleaned in between batches. -A mistake in a batch can mean the entire group of products is ruined, this increases waste. -Requires careful production planning.

Question 44

What does flow production involve and what are some examples of batch production?

Answer 44

Flow production involves mass producing identical products. Products are made on an assembly line where a different component is added to the product at each stage. Workers and machinery will have a specific task to fulfil at each stage. Flow production tends to be capital intensive meaning that machinery does most of the work. Examples: Car and electronics manufacturing, light bulb or matchstick manufacturing.

Question 45

Advantages of flow production?

Answer 45

-Mass production of identical products allows businesses to achieve high economies of scale. -Use of machinery means higher levels of output and consistency in quality. -Very large quantities of products can be made. -Use of machinery means less staff is needed reducing costs of wages.

Question 46

Disadvantages of flow production?

Answer 46

-Products cant be tailored to customer requirements. -There is a high initial outlay in purchasing the computers and machinery needed to set up an assembly line. -When equipment breaks the whole production line may need to stop.

Question 47

What factors should a business consider when deciding which method of production to use?

Answer 47

-The nature of a product: depending on what is being made, one method might be more suitable than others. -Demand for product: they have to choose a method that will allow them to make enough products to fulfil customer demand. -Availability of skilled labour: is there enough skilled labour to allow a business to use job production, if not then they will have to use batch or flow production. -Availability of technology, if there isn't enough availability it will be hard to set up a batch line. -Size of premises: how much space the business has to make products.

Question 48

What are the three quality inputs?

Answer 48

-Raw Materials, the raw materials put into a product have to be high quality. A business cannot make a high quality product using low quality materials. A business should find a supplier that supplies high quality products. -Employees: A companies workers should have workers with the correct level of skills and knowledge to make a product to high standards. -Technology: Machinery should be well maintained to ensure its functioning correctly. A business should also make sure technology is up to date.

Question 49

What are the methods of ensuring quality?

Answer 49

-Quality control: When the quality of raw materials is checked at the start of production and the finished good is checked at the end of production. -Quality assurance: When the quality of a product is inspected during every stage of production. -Quality Circles: A small group of employees from different levels across a business who meet regularly to discuss how to improve quality and methods of quality. -Benchmarking: When the company in a market with the highest level of quality products is identified and a competing business steals the techniques of the other business to make the quality of their products better.

Question 50

What are some benefits of providing a quality product

Answer 50

-A companies image and reputation will improve. -Higher price can be charged for products. -Customers will be very satisfied with product. -Customers may recommend the business to others -A competitive edge can be gained by a business if they have better quality products than competitors.