Topic 3 - Decision Making to Improve Marketing Performance Flashcards
Why is marketing one of the most important activities in a business?
Has direct effect on profitability and sales.
What does the marketing section of a business need to work closely with?
Operations, research and development, finance and human resources to check their plans are possible.
What will operations plan their production schedules?
Use sales forecasts produced by marketing department.
What do marketing objectives set out?
What a business wants to achieve from it’s marketing activities. Needs to be consistency with overall aims and objectives of business.
Define marketing
Process of identifying, anticipating (predicting) and satisfying customer needs profitably.
What do marketing objectives need to be consistent with?
Purpose of marketing and overall corporate (business) objectives.
What is the SMART criteria?
Specific - Details exactly what needs to be done
Measurable - Achievement or progress can be measured
Achievable - Objective accepted by those responsible for achieving it
Realistic - Objective possible to attain
Timed - Time period for achievement clearly stated.
What are some business benefits of setting marketing objectives?
- Ensure functional activities consistent with corporate objectives
- Provide focus for marketing decision-making and effort
- Provide incentives for marketing team and measure of success/failure
- Establish priorities for marketing resources and effort.
Internal influences on marketing objectives
- Corporate objectives
- Finance
- Human resources
- Operational issues
- Business culture
External influences on marketing objectives
- Economic environment
- Competitor actions
- Market dynamics
- Technological change
- Social & political change
What do market conditions relate to?
Attractiveness (or otherwise) of overall market in which business operates.
2 key indicators of market conditions:
1) Economic Growth (GDP)
2) Market demand
What does economic growth measure?
Value of output in economy.
Key points of economic growth
- Level of demand in most markets influenced by rate of economic growth
- Economies vary in terms of their ‘normal’ long-term growth rate
- Mature economy like UK has long-term growth rate of around 2-3%
- GDP growth varies depending on state of economic cycle
What does market demand measure?
How much of good/service consumer wants - and able to pay for.
Key points of market demand
- Size and growth rate of market is key indicator of market conditions
- Fast-growing market will encourage new entrants as well as benefit existing competitors
- Slow-growing/declining market makes market conditions much tougher, with competitors fighting for their share of weak demand.
By market fundamentals we mean understanding issues such as:
- How big is the market?
- How fast is market growing and what is market growth potential?
- Key social, economic, political/legal and technological factors that drive change in market
- Who are existing competitors and what market shares do they have?
- Extent of branding and customer loyalty in market
Detailed marketing analysis is particularly important for tasks such as:
- Forecasting sales for new products/investments into new markets
- Gathering evidence to support finance-raising exercise
- To support new marketing strategy or significant changes to marketing objectives
- To help make decisions in relation to significant organisational or operational change.
What 2 methods could be used to analyse a market that are in common use?
1) Test marketing
2) Trend analysis (Extrapolation, moving averages and correlation)
What is secondary market research?
Uses data that already exists and has been collected by someone else for another purpose.
Where can sources of secondary data come from?
Within firm itself - known as internal secondary data.
Give an example that has given businesses the chance to gather a wide range of information on customers.
Increasing availability and use of loyalty cards and big data. This allows them to target promotional campaigns more effectively.
Why should internal sources of data always be considered as a first line of enquiry for any investigation?
Usually the quickest, cheapest and most convenient source of info available. Internal data also be exclusive to organisation that generated it, so that rival firms will not have access to it.
What is a drawback of internal data?
May be incomplete or out of date, and, if project is new, may be no relevant data at all.
Examples of external sources of secondary data
- Government
- Competitors
- General media
- Trade publication
- Commercial market research organisations
What is sampling?
Getting opinions from number of people, chosen from specific group, in order to find out about whole group.
Why do market researchers make extensive of sampling?
It would be expensive and time-consuming to collect data from whole population of a market.
Sample design covers:
- Method of selection
- Sample structure
- Plans for analysing and interpreting results.
What can sample designs vary from?
Simple to complex. Depend on type of information required and way sample’s selected.
What does sample design affect?
Size of sample and way in which analysis is carried out.
What are many sample designs built around?
Concept of random selection. This permits justifiable inference from sample to population, at quantifiable levels of precision.
What is the first step in good sample design?
Ensure that specification of target population is as clear and complete as possible to ensure all elements within population are represented.
How is the target population sampled?
Using a sampling frame.
What key factors will depend upon appropriate sample size?
1) No estimate taken from sample expected to be exact
2) To lower margin of error usually requires larger sample size
3) Confidence level is likelihood that results obtained from sample lie within required precision
4) Population size does not normally affect sample size.
What is cluster sampling?
Random sample of clusters taken, then all units within cluster are examined.
Advantages of cluster sampling
- Quick and easy
- Doesn’t need complete population information
- Good for face-to-face surveys
Disadvantages of cluster sampling
- Expensive if clusters are large
- Greater risk of sampling error
What is convenience sampling?
Those who are willing to volunteer and easiest to involve in study.
Advantages of convenience sampling
- Subjects readily available
- Large amounts of information can be gathered quickly
Disadvantages of convenience sampling
- Sample isn’t representative of entire population, so results can’t speak for them - inferences are limited
- Prone to volunteer bias.
What is judgement sampling?
Deliberate choice of sample - opposite of random.
Advantages of judgement sampling
- Good for providing illustrative examples or case studies
Disadvantages of judgement sampling
- Very prone to bias
- Samples often small
- Cannot extrapolate from sample
What is quota sampling?
Aim is to obtain sample that’s ‘representative’ of overall population.
Population’s divided (‘stratified’) by most important variables such as income, age, location.
Advantages of quota sampling
- Quick and easy way of obtaining sample.
Disadvantages of quota sampling
- Not random, so some risk of bias
- Need to understand population to be able to identify basis of stratification.
What is simply random sampling?
Makes sure every member of population has equal chance of selection.
Advantages of simply random sampling
- Simple to design and interpret
- Can calculate both estimate of population and sampling error
Disadvantages of simply random sampling
- Need a complete and accurate population listing
- May not be practical is sample requires lots of small visits over country.
What is systematic sampling?
After randomly selecting starting point from population between 1 and *n, every nth unit selected.
Advantages of systematic sampling
- Easier to extract sample than via simple random
- Ensures sample spread across population
Disadvantages of systematic sampling
- Can be costly and time-consuming if sample is not conveniently located.
Why may accurate, up-to-date information obtained by market research may not be realised?
- Budgetary constraints
- Time constraints
- Reliability of data
- Legal & ethical constraints
Correlation
Another method of sales forecasting. Looks at strength of relationship between 2 variables.
Independent variable
Factor that causes other variable to change on x-axis.
Dependent variable
Variable being influenced by independent variable on y-axis
How can a managing manager make sense and use all of the data points once they have been plotted on the scatter diagram?
‘Line of best fit’ (regression line) which attempts to plot mathematical relationship between variables based on data points.
What’s a positive correlation?
Positive relationships exists where as the independent variable increases in value, so does dependent variable.