Unit 2 Marketing Flashcards
(34 cards)
What are the objectives of the marketing department?
-Carrying out market research to identify customer needs
-Making decisions on the marketing mix (4p’s)
-Informing customers about their product and persuading them to buy it
Qualitative and Quantitative Data
Qualitative data- Related to attitudes opinions and feelings. Can be difficult to statistically analyse.
Quantitative data- Data related to numbers. This data can be added up and satistically analysed.
Advantages of primary research
-It is up to date
-It is collected for your specific purpose
-It can be trusted because you gathered it.
Disadvantages of primary research
-It can be very expensive to collect
-It can be time consuming to collect
Advantages of secondary research
-It is quick to collect
-It can be cheaper than primary research
-There is a wide range of research on the internet
Disadvantages of secondary research
-It could be out of date
-The source might be biased/untrustworthy
-The data might not be wholly relevant
Methods of market research
Questionnaire
Focus groups
Interview
Surveys
Trials
Websites
Magazine/newspaper article
Census data
What is market research and why is it important?
-Market research is how businesses collect information on whether or not their products or services will be bought
It is important as it will:
- help a business be clear on whether there is demand for their product/service
-avoids unnecessary investment
Different ways the market is segmented
Age
Gender
Income
Location
Lifestyle
Pricing Methods: Price Penetration
-When a business tries to enter a competitive market by starting off at a low price to make a customer base then returning to a normal price
Price penetration Adv + Disadv
Adv:
-New customers might be attracted to try the new product, and then continue to buy if they like it.
Disadv:
-However, the business might not make enough revenue to cover costs during this period
-A low price might present an image of low quality
-If brand loyalty is high, business might not attract customers.
Pricing methods: Cost-plus pricing
When a business see how much it costs to make/buy the product as well as any other costs, and then adds a percentage in order to ensure profit on a product.
Cost-plus pricing Adv + Disadv
Adv:
A good way to ensure survival and that products sold actually make a profit.
Disadv:
- Price may be too high compared to competition
-As costs change, time and money need to be spent changing prices
- Can be difficult to charge to cover all running cost of a business
Pricing Methods: Price skimming
Where the price of the product starts off high because the product is new/unique and gradually comes down to a normal price as demand falls.
Price skimming Adv + Disadv
Adv:
-Allows business to maximise sales whilst the product is in high demand
-Allows businesses to target lower income groups as demand falls, so that all target groups pay the most possible
Disadv:
-It might put consumers off if price is too high
-There will only be a very short period of very high demand
-Customers may simply wait until the price falls
Pricing methods: Competitor pricing
Where a business tries to match or beat their competitors’ prices
Competitor pricing Adv + Disadv
Adv:
Customers like to shop around for the best price so it can help attract customers away from competitors
Disadv:
-Lowering prices to match/beat competitors can slash profit margins
-Small businesses will find it hard to match/beat the prices of big competitors as they don’t have the benefit of economy of scales
Pricing methods: Promotional pricing
The short term use of price reductions and special offers to increase sales
Promotional pricing Adv + Disadv
Adv:
-A good way to increase sales in the short term
-Whilst buying products on promotions, customers might buy more profitable items in the shop
-Can create improved cash flow
Disadv:
-Some customers may only come to the store for the sales
-Each item is sold for less revenue than the initial price
-It costs money to advertise promotional offers
Four good features of a product
- It is innovative
-It is functional
-It is made to a good standard
-It meets the needs of the customer
Disribution Channels: Producer –> Customer
When the producer of a product sells directly to the customer (e.g Dell computers sell directly to customers)
Distribution Channels: Producer –> Customer Adv + Disadv
Adv:
-The business has complete control over brand image
-The business has direct contact with customer (useful for market research)
-The business can make a higher profit off each product
Disadv:
-The business will only sell one unit at a time, therefore admin costs will be high
-Customers may prefer the convenience of a local high street retailer
-As a business grows in size, it can be difficult to manage so many individual customers/sales.
Producer –> Retailer –> Customer
Where the producer sells their product in big batches to a retailer, which in turn sells to the customer
Producer –> Retailer –> Customer Adv + Disadv
Adv:
-The producer is able to send one large delivery to the retailer, rather than multiple smaller deliveries
-Many products sell better if placed in a convenient location for customers
-Customers might prefer to buy from “trusted brands”
Disadv:
-The producer will have to sell to the retailer at a lower price so they can get their ‘mark-up’
-Some larger retailers can bully smaller businesses into getting lower prices or longer credit terms.
