Unit 3 Flashcards

Question

Internal influences on marketing objectives and decisions

Answer 1

- Finance: the marketing function needs to operate within the budget allocated. - Production capacity: it must be physically possible to achieve growth targets. - Human resources: market growth may be dependent on the skills and knowledge of the workforce and the availability of labour. - Nature of product: innovative products have more scope for growth and development than staples such as bread and fuel. - Investment needed - Planned growth

Answer 2

- Market and competition: objectives will vary according to the state of the market and the actions of competitors. - Economic factors: factors such as the economic cycle and interest rates affect consumer spending. - Ethics: consumers have become more aware of environmental issues, e.g. the amount of packaging. - Technology: this affects the way businesses both produce and sell goods, e.g. mass customisation and online sales. - Changing trends in society

Answer 3

In order to be able to satisfy customers' needs, businesses need to first identify and understand them. This is achieved through conducting market research.

Answer 4

Involves the systematic collection of data about the market and the customer to inform decision-making. This may involve: - study of market trends and characteristics - analysis of market shares and potential of existing products - sales forecasting for products - analysis and forecasting of sales of new products

Answer 5

- Competitor analysis - Customer feedback - Ideas for new product development - Identify trends in the market - Aid pricing strategies - Meeting consumer needs

Answer 6

- Primary research - Secondary research

Answer 7

Also known as 'field research', it involves the collection of information for the first time directly by or for a business to answer specific issues or questions. It is data that has not been gathered before.

Answer 8

- Surveys/polls: conducting questionnaires face to face, by post, by telephones or online. - Observation: watching people, observing reactions to displays or counting footfall. - Focus groups: using small groups of people to determine consumer attitudes and opinions. - Test marketing: trying out products on a small group prior to a full-scale launch.

Answer 9

The second-hand research involving the collection of data that already exists and has been produced by somebody else.

Answer 10

- Published reports: these might be reports published by trade associations and journals, which may contain valuable information on markets and trends. - Government and other agencies: a great deal of information is available from various agencies. A key publication is the Annual Abstract of Statistics. - Online research: a great deal of information regarding markets and consumer behaviour is also widely available through the internet.

Answer 11

- Watching how consumers behave provides many insights, but can leave questions unanswered. - Observations work well in retail markets: sit outside a shop and watch how many people walk by, look at the window display, etc.

Answer 12

- Sent to the address of potential customers who complete the form and send it back in a pre-paid envelope. - Relatively cheap, a postal survey can cover a wide geographical area and avoids the potential for interviewer bias. - However, response rates (the proportion of people sending back a completed survey) are often very low and it can take a long time before enough surveys are returned.

Answer 13

- Not to be confused with "telesales" (which is a method of selling), the telephone interview allows quicker feedback than a postal survey. - However, potential customers are often wary of being called and may be reluctant to give anything other than short answers.

Answer 14

- Increasingly popular and relatively low cost, online surveys are widely used by small businesses as a way of capturing the views of existing and potential customers.

Answer 15

- Personal interviews conducted face-to-face. - A costly, but a good way to get detailed insights from an indiviual.

Answer 16

- Groups of potential customers are brought together to discuss their feelings about a product or market. - Focus groups are a good way of getting detailed information about customer tastes and preferences.

Answer 17

- Involves selling a new product in a small section of the market in order to assess customer reaction. - E.g. a start-up could start by selling to a limited local area in order to iron-out product issues. - Software firms often test-market their products by offering "beta" versions for testing by a small group of potential customers. - Can be a good predictor of how a new product or service will be received by the larger market (provided that it can be kept secret from competitors).

Answer 18

ADVANTAGES: - Specific to the business/product (more relevant) - Up to date DISADVANTAGES: - Expensive and time-consuming - Sample may be too small - Poor validity of research (may be biased)

Answer 19

ADVANTAGES: - Can be cheaper - Immediately available - Looks at the whole market DISADVANTAGES: - Not specific to the business/product - Can be out of date - Accessible to competitors

Answer 20

- Quantitative data: factual information (numerical, objective data) "hard data" as it is measurable - Qualitative data: attitudes, views and opinions (subjective data) "soft data as it is often personal

Answer 21

The aim of qualitative market research is to find out about the attitudes and opinions of consumers. It is collected from small groups of consumers such as focus groups. It can reveal consumer reactions to: - products - pricing - packaging - branding This might enable a business to design products that are more appealing to consumers.

Answer 22

The collection of information on consumer views that can be analysed statistically. It can be represented in easy-to-read charts and graphs showing: - sales and potential sales - the size of the market - the prices consumers are prepared to pay.

Answer 23

ADVANTAGES: - Provides more in depth info about customers' opinions. DISADVANTAGES: - Usually collected through focus groups: expensive and can be unreliable.

Answer 24

ADVANTAGES: - Based on a larger number of respondents so more accurate. DISADVANTAGES: - Doesn't explain the reasons behind the data (why?)

Answer 25

Market mapping uses a graph to plot competitors or products in a market to understand their position and to spot a gap in the market. - To see where competition is most concentrated. - Two key features of a product/service are identified, e.g. price and quality. - Each brand in that market can be placed on a grid according to quality (high or low) and price (high or low).

Answer 26

PROS: - Spot gaps in market - Analyse competitors - Encourage market research CONS: - Gap does not equal demand - No guarantee of success - Reliability of market research

Answer 27

The selection of a representative group of consumers from a larger population. - The general principle is that the larger the sample, the more accurate the results are likely to be.

Answer 28

A sample is a small group of people (subgroup or subset) of the target population who are representative of the target population.

Answer 29

- Random sampling - Quota sampling - Stratified random sampling

Answer 30

A sample is selected from a population where each individual is chosen entirely by chance (at random) and has an equal chance of being selected. - Can be any age, any gender, any ethnicity, live anywhere. - Appropriate when a firm is researching a product aimed at a large target group. - Computers are often used to select people randomly.

Answer 31

The population is first segmented into subgroups (or strata) before respondents are randomly selected from within that subgroup. - E.g. within a subgroup of 16-18 year olds any member of the population has an equal chance of being selected. - Avoids bias by ensuring that the composition of the sample accurately reflects that of the entire population.

Answer 32

The population is first segmented into subgroups, each sharing common characteristics, before a judgement is made in selecting respondents that are representative of that subgroup. - E.g. a survey might be conducted on the views of women about a new product, and the number of interviewees in each age category could be clearly set out. - This saves money by limiting the number of respondents. - Reflecting the % variations of target population in the sample.

Answer 33

ADVANTAGES: - Simple, easy to do. - Unbiased results. DISADVANTAGES: - May not guarantee representation of vital subsets of the larger population.

Answer 34

ADVANTAGES: - Ensures representation from different subsets. - More precision vs random. - Able to analyse results from 'each' subset. DISADVANTAGES: - More time consuming as need to create subsets. - Who is defining the subsets? risks of overlooking key subsets.

Answer 35

ADVANTAGES: - Researchers control the composition of the sample to ensure representation of certain characteristics. DISADVANTAGES: - Prone to researcher bias. - Not random, may not be representative.

Answer 36

- Reduces time (fewer people to survey). - If the right people are surveyed, should be representative of the target population.

Answer 37

- Samples may be inaccurate (asking the wrong people). - The data collected may be unrepresentative (questions may be biased, the sample may be too small, etc.)

Answer 38

- The sampling technique used. - How the sample was carried out. - The size of the sample.

Answer 39

- The availability of manpower (as research can be expensive) and other resources, e.g. budget and costs. - The importance of accuracy of data. - The required degree of confidence in results and attitudes to risk.

Answer 40

Once market research has been conducted, marketing teams need to decide how reliable it is, as a business cannot be 100% certain about any findings. - They do this by producing a confidence level and using confidence intervals.

Answer 41

- The margin of error that a researcher would experience if they asked a particular question of a sample group and expected to get the same answer back beyond that sample. (The plus or minus figure used to show the accuracy of results arising from sampling). - For instance: if a researcher used a confidence interval of 5, and 70% of respondents gave a particular answer, then the researcher could be sure that between 65% and 75% of the whole population would give the same answer.

Answer 42

Sample size - The smaller the sample, the greater the margin of error and therefore the greater the confidence interval.

Answer 43

Tells you that the estimated value is relatively stable - repeated polls would give approximately the same results. - Greater degree of precision.

Answer 44

- An expression of how confident the researcher is in the data collected. - The probability that research findings are correct. - Expressed as a percentage and indicates how frequently that percentage of the population would give an answer that would lie within the confidence interval. - The most commonly used confidence level is 95%.

Answer 45

- Developments in technology mean that vast amounts of information can be collected, stored and analysed. - This may enable a business to gain a much greater understanding about the person buying a product and as a result, firms such as Amazon can make recommendations to individual customers based on past buying habits. - E.g. store and loyalty cards are an extremely effective way for businesses to collect data on their customers. - Technology can provide faster communication, make forecasting easier, and enable targeted sales messages, but a business must have the right data in the first place.

Answer 46

A statistical technique used to establish the extent of a relationship between two variables, such as the level of sales and advertising expenditure. - Takes marketing data and plots it on a chart to see whether there is a relationship. - Line of best fit applied to see whether correlation exists.

Answer 47

Correlation occurs when there is a direct relationship between one factor and another. - Knowledge of correlation can sometimes help in decision making. For example, knowing that there is a positive correlation between incomes and sales might enable a business to more accurately forecast sales.

Answer 48

This relationship may be positive or negative. - E.g. a rise in incomes may lead to a rise in sales, which is a positive correlation (because they move in the same direction). - E.g. or a price increase may lead to a fall in demand, which is a negative correlation (because they move in opposite directions). It can also be either strong or weak. - Strong: when it is easy to draw a line of 'best fit'. - Weak: when it is difficult to find a line of 'best fit'. The weaker the correlation is, the least accurate the data will be. Can also be no correlation (no relationship), data is scattered.

Answer 49

Results in correlation should be treated with caution as correlation only shows a relationship between two variables. - Sales might appear to rise with increased advertising, but it might be due to a competitor raising its prices rather than the increase in advertising. - Does not always mean there is a cause-and-effect relationship between the two variables.

Answer 50

Analyses the past performance of a variable, such as sales, and extends the trend into the future. - It is a useful technique when trends can clearly be identified and the market is relatively stable.

Answer 51

1) Plot past sales figures using a graph. 2) Work out the trend by drawing the 'line of best fit' (by calculating the moving averages) 3) Extend the 'trend' in the future to predict sales.

Answer 52

Extrapolation should be treated with caution as it assumes that the future will be similar to the past. - It may not be suitable for industries subject to rapid change such as fashion and technology.

Answer 53

Elasticity is a measure of the responsiveness or sensitivity of demand to a change in a variable, e.g. price or income.

Answer 54

A measure of how responsive demand is to a change in price. (Essentially, if price changes does demand change by a bigger proportion or a smaller proportion than the change in price?) - This will determine whether a change in price will lead to an increase in decrease in revenue.

Answer 55

(% change in quantity demanded) / (% change in price) For example: When price goes down by 10% there is a 15% rise in demand, meaning that: - % change in demand is +15% - % change in price is -10% - PED = +15% / -10% = -1.5

Answer 56

If PED figure is below -1, this means that the % change in demand will be greater than the % change in price, so the demand is elastic. Customers are sensitive to price. If PED figure is between -1 and 0, this means that the % change in demand is less than the % change in the price, so the demand is inelastic. Customers are not sensitive to price.

Answer 57

ELASTIC (e.g. -1.5): - If price increases, will lead to a bigger % decrease in demand so revenue will fall (less sales). - If price decreases, will lead to a bigger % increase in demand so revenue will rise (more sales). - Therefore should be careful with price set. INELASTIC (e.g. 0.7): - If price increases, will lead to a smaller % decrease in demand so revenue will rise. - If price decreases, will lead to a smaller % increase in demand so revenue will fall. - Therefore charge highest possible price.

Answer 58

Sales promotion will be effective for elastic, but useless for inelastic.

Answer 59

Knowing the price sensitivity enables a business to anticipate how customers will react to a change in price. - In some markets/situations the price hugely affects demand. - In other markets/situations the price doesn't affect demand.

Answer 60

PED x % change in price

Answer 61

PED x % change in demand

Answer 62

- The strength of the brand (e.g. Apple) - Whether the product is a necessity (e.g. petrol, water, gas, or electricity). - Whether there are substitutes (can the product be replaced by something else, e.g. train vs car) - Whether other similar products are available (level of competition, e.g. McDonalds vs Burger King)

Answer 63

- Set the optimum price to maximise sales revenue. - Anticipate the change in demand when de/increasing the price. - Plan production output (no. of units produced), order the correct amount of stock from suppliers to match the new level of demand after a change in price. - Decide on the correct promotion method. E.g. sales promotion isn't a suitable promotion method for products/services with an inelastic PED.

Answer 64

A product or service that isn't necessary. It's more of an aspiration.

Answer 65

A product or service that is a necessity. It needs to be bought.

Answer 66

A product or service that has a low perceived value.

Answer 67

Income elasticity of demand (YED) measures how sensitive quantity demanded is to changes in income. (Essentially, if income changes does demand change by a bigger proportion or a smaller proportion than the change in price?) - This will determine whether a change in income will lead to an increase or decrease in revenue.

Answer 68

(% change in quantity demanded) / (% change in income) For example: When income goes up by 3% demand rises by 6%. - % change in quantity demanded is +6% - % change in income is +3% - YED = +6% / +3% = +2

Answer 69

If the YED figure is below -1, this means that the % change in demand will be greater than the % change in income, so the demand is elastic. But the change in income will lead to an opposite change in demand, e.g. an increase in income will lead to a decrease in demand. If the YED figure is between +1 and -1, this means that the % change in demand is less than the % change in income, so the demand is inelastic. If the YED figure is above +1, this means that the % change in demand will be greater than the % change in income, so the demand is elastic. An increase in income will lead to an increase in demand.

Answer 70

The change in demand will depend on the type of product: Inferior goods (below YED figure 0) Normal goods (between YED figures 0 and +1) Luxury goods (above YED figure +1)

Answer 71

ELASTIC (below -1) - If the income increases, the demand of inferior goods will fall and revenue will fall too. - If the income decreases, the demand of inferior goods will increase and revenue will fall too. INELASTIC (between -1 and +1) - If the income increases or decreases, the change in demand for normal/inferior goods will be small and so there will only be a small change in revenue. ELASTIC (above +1) - If the income increases, the demand of luxury goods will increase and the revenue will increase too. - If the income decreases, the demand of luxury goods will decrease and the revenue will decrease too.

Answer 72

It helps managers plan for changes in the incomes of their customers. - If the economy is doing well and incomes are rising, this will lead to relatively fast growth in the demand for products that have a positive and high income elasticity of demand. - During a boom, demand for inferior goods is likely to fall.

Answer 73

Although elasticity can be a useful tool, marketing decisions should not be based on this alone. Other factors that should be considered include: - brand loyalty - competitor actions - consumer tastes and fashion - availability of substitutes

Answer 74

Elasticity changes over time, and it is important in decision making to use the most up-to-date figures. - A figure that is even 1 year old may be out of date as the market may have changed or competitors may have introduced new products.

Answer 75

The STP process (segmentation, targeting & positioning) 1) Segmentation - identify and describe market segments. 2) Targeting - evaluate segments and decide which to go after. 3) Positioning - design a product or service to meet a segment's needs and develop a marketing mix that will create a competitive advantage in the minds of the selected target market.

Answer 76

The process of dividing a market into identifiable, distinct groups (sub markets). Those customers within the same segment will share common characteristics that can help a business target them and market to them effectively.

Answer 77

- Demographic - Geographic - Behavioural - Income

Answer 78

- Identifies subgroups of the population based on social and economic profile or characteristics of individuals or households. - This includes factors such as age, gender, level of education, race and religion.

Answer 79

- Identifies subgroups of the population based on where people live, e.g. regions, cities or neighbourhoods. - People in different geographical areas display different characteristics and needs.

Answer 80

Identifies subgroups of the population based on the behavioural patterns of the consumer rather than their characteristics, for example: - Reasons for making purchases, e.g. needs, emotions, rewards. - Frequency of purchase, e.g. heavy user or light user. - Time of purchase, e.g. seasonal, weekly, late at night. - Brand loyalty

Answer 81

- Identifies subgroups of the population based on their levels of income and profession or socio-economic group. - Socio-economic groups: - A : Top management - B : Middle management - C1 : Junior management - C2 : Skilled manual - D : Semi-skilled - E : Casual workers, unemployed & pensioners

Answer 82

- Helps understand the need of a specific group of customers. - Helps design a tailored product or service. - Helps differentiate a product or service. - Makes marketing more targeted and efficient.

Answer 83

- Segment size may be too small to be profitable (not enough customers and revenue).

Answer 84

The process whereby, after segmenting a market, a business will choose who to aim its products at, i.e. its target market.

Answer 85

- The nature of the product: this might be the qualities of the product that help differentiate it or what the product may be used for. - Competition: a business may want to avoid areas of the market that are highly competitive. - The consumer: products might be developed specifically to suit consumer needs.

Answer 86

When businesses identify and satisfy the demands of small segments of a larger market. E.g. the radio station Classic FM serves the niche of people who wish to listen to popular classical music.

Answer 87

BENEFITS: - Enables specialisation & differentiation (USP). - Often less competition in a niche market. - Can charge premium price as the product meets the exact needs. - May benefit from price skimming. - Can be highly profitable. - Customer loyalty. DRAWBACKS: - The niche may be too small to be profitable. - Higher costs due to small scale (missing out on economies of scale). - Success may attract competition.

Answer 88

Targeting the entire market.

Answer 89

1) Generic product 2) Product adapted to each segment

Answer 90

BENEFITS: - Large target market means potentially high revenue and high market share. - Large scale enables economies of scale (purchasing and marketing). - Helps brand awareness. DRAWBACKS: - More competition means price competition. - High levels of initial investment required to sell or produce large scale, e.g. on resources such as buildings, machinery and vehicles. - Higher costs due to product adaptation to segments. - Generic products may not meet customer needs.

Answer 91

Market positioning is where particular products/brands stand in the market compared to competitors.

Answer 92

Market mapping is a matrix or map that illustrates the range of positions that a product can take in a market based on two dimensions that are important to customers. - It can help a business identify the position of its product in the market relative to others. - Two key features of a product or service are identified, e.g. price and quality. Each brand in that market can be placed on a grid according to the quality, high or low, and price, high or low.

Answer 93

Market positioning helps decide on product specification, price, where to sell the product, and how to promote it. In other words, decide on the marketing mix.

Answer 94

PROS: - Spot gaps in the market by seeing where competition is most concentrated (highly competitive markets). - Analyse competitors. - Encourage market research. CONS: - Gap does not equal demand and profit. - No guarantee of success. - Reliability of market research.

Answer 95

A combination of factors that can be controlled by a company to influence consumers to purchase its products. - The combination of marketing activities that an organisation engages in so as to best meet the needs of its targeted market. - The main variables comprising a firm's marketing strategy.

Answer 96

Because each element of the marketing mix is related to the others. Elements of the mix should work together to achieve the desired effect.

Answer 97

The mix was first developed for fast-moving consumer goods and consisted of the 4Ps of: - Price - Product - Place - Promotion

Answer 98

- Product: the good or service that the customer buys. - Price: how much the customer pays for the product. - Place: how the product makes its way to the customer (distributed). - Promotion: how the customer is found, informed and persuaded to buy the product or service. - People: the staff who make contact with customers in selling and/or delivering the product. - Process: the systems and processes that deliver a product to a customer. - Physical environment: the elements of the physical environment the customer experiences.

Answer 99

- The marketing mix blends together the elements of a marketing strategy. - There must be internal consistency within the mix. - Mix must be consistent with the product and its target market. - No one element of the marketing mix is more important than another; each element ideally supports the others. - Firms modify each element in the mix to establish an overall brand image and unique selling point (USP) that makes their products stand out from the competition.

Answer 100

- Achieves marketing objectives. - Meets customer needs. - Is balanced and consistent. - Creates a competitive advantage. - Consistent with the chosen target market and positioning. - Able to constantly adapt to the ever-changing business environment. This could mean a business adapting their price, adopting new types of promotion, updating their product or changing distribution channels as required.

Answer 101

- Retail - Wholesale - Mail order - Internet - Direct sales - Peer-to-peer - Multi-channel

Answer 102

- Strategies - Skimming - Penetration - Psychological - Cost-plus - Loss leader etc.

Answer 103

- Special offers - Advertising - Endorsements - User trials - Direct mailing - Leaflets/posters - Free gifts - Competitions - Joint ventures

Answer 104

- Employees - Management - Culture - Customer service

Answer 105

- Especially relevant to service industries - How are services consumed?

Answer 106

- Smart - Run-down - Interface - Comfort - Facilities

Answer 107

- Design - Technology - Usefulness - Convenience - Value - Quality - Packaging - Branding - Accessories - Warranties

Answer 108

- Technology - Finance - Market research - Nature of the product

Answer 109

- The level of profits that a business earns can impact on the price that it charges. - A profitable business is able to cut prices significantly, at least in the short term. - Its financial reserves also enable it to engage in extensive promotional campaigns. - Another aspect is that a business with a healthy cash flow will be able to extend the range of outlets it uses by offering favourable trade credit terms.

Answer 110

- The type of product can influence which elements of the mix are emphasised. - An insurance firm may spend heavily on advertising to generate large numbers of enquiries in order to win an acceptable number of customers. - In contrast a portrait painter may rely on the quality of the product and word-of-mouth promotion to achieve sales.

Answer 111

- For some products that possess the latest technology, advertising may be used to inform potential customers of their existence and benefits. - They will have high prices to maximise short-term profits and cover the costs of research and development. - Technology has also affected the place element of the marketing mix. Developments have allowed publishers of music and books to distribute their products using internet downloads.

Answer 112

- Primary market research may be the most important influence in designing a marketing mix. - Its findings may provide information to help to make judgements on the form, functions and design of the product. - The research may uncover information on prices that consumers will be willing to pay and the type of purchasers. - May also determine pricing strategies.

Answer 113

There is a distinction between goods or services intended for use by individuals & households (consumer products) & for use by other businesses (industrial products).

Answer 114

Industrial products are bought by other businesses for further processing or to be used in the business activity (transformation process). For example: Synectics - sells surveillance solutions to large organisations and local government. Its sales team are experts in their field and are able to build unique security solutions for their clients.

Answer 115

Consumer products are bought by the final customers for personal use or consumption. For example: Breitling - a premium watch maker that specialises in making watches for professionals, in particular the aviation industry. Breitling has a number of its own boutiques in major cities across the UK.

Answer 116

- Convenience products: products widely available, frequently bought or impulses, no planning, low customers involvement. E.g. crisps, chocolate bars, sandwiches, drinks. - Shopping products: customers will 'shop around', some planning and customers involvement, brand and price are important. E.g. clothes, shoes, white goods, electronic equipment. - Speciality products: customers take time to make a decision, high level of customer involvement, staff involved in the purchase are important. E.g. jewelry, cars.

Answer 117

Refers to differentiating factor(s) that allows a business to differentiate its product or service from others in the market.

Answer 118

- Core product: NOT the tangible, physical product but the BENEFIT of the product that makes it valuable. E.g. a watch - the benefit is that it tells the time. - Actual/tangible product: the actual physical product and relates to quality and design. E.g. it's accurate, comfy and waterproof. - Augmented product features: the additional benefits which go beyond what a customer expects and provide additional benefits to the customer.

Answer 119

1) Product warranty - most popular way to augment a product. A company makes a promise to fix a certain item if it breaks down in a specified time period, e.g. household appliances. 2) Installation - the companies have some technicians in their staff who can install or configure a product for free, e.g. a washing machine. 3) Free delivery - widely used for augmenting products by brands from different industries, especially furniture industry for expensive products. 4) Refund - some businesses provide refund option during a specified time period if a product doesn't meet client's needs. 5) Updates - common among online services and software products. Users are offered free and timely updates to their products. 6) Product trials - used by online services to engage more clients. Users are offered to test a particular service for free during a specified time period. This way marketers expect that leads will want to continue using a product and then buy it as a result. 7) Free samples - popular both online and in-store. Cosmetic stores usually give their clients free samples if they spend a certain amount of money on their purchase.

Answer 120

The process of developing new products or improving existing ones and then bringing them to the same market segments. - Product development is also called Research & Development (R&D).

Answer 121

Idea generation -> prototype + testing -> development -> modifications -> launch to market

Answer 122

- Finances (£) - Research facilities (laboratory, equipment, machines) - Time available - Staff expertise/talent - Entrepreneurial skills of managers and owners (creativity - being able to think up new ideas for goods and services that fit with customer needs leads to the development of many new products). - Previous success/failure - Strategy: innovation or copying - State of current products

Answer 123

- Market research data: is there a need for something new? - Competitors' actions (a competitor producing a new product can be a spur to a rival to produce something that is at least as good, if not better. E.g. hotels have improved their services by offering guests a choice of different types of pillow to enhance comfort) - Shareholders' pressure and attitude to risk taking. - Government policies (banning existing products) - Technology (e.g. advances in battery technology technology have helped to generate a range of more efficient electric cars. Firms use these technological advances as the basis for the development of new products that meet the needs of consumers more fully).

Answer 124

- Repackaging - Performance improvements - Quality improvements

Answer 125

- Likely lead to increased sales ... hopefully increased revenue. E.g. for creation of new products: small product portfolio, existing products: extension strategy to extend lifecycle. - Opportunity for price skimming which can lead to increased revenue. - Long term strategy (Boston Matrix - increase cash cows, Product life cycle - maturity stage) - Sell to a different market segment (LID - location, income, demographic)

Answer 126

- Costs (research & development, marketing), risk of failure: could lead to poor cash flow and hinder brand reputation) - Low volume of output (due to new product/modifications) ... lead to no economies of scale which can lead to increased costs and therefore price, which could decrease sales.

Answer 127

Businesses add value by creating a unique selling point or USP for their products. A USP allows a business to differentiate its products from others in the market. This can help the business in a number of ways: - The business can base its advertising campaign around the difference between its product and those of its competitors. - Having a USP encourages brand loyalty as it gives customers a reason to continue to buy that particular business' product. - A USP allows a business to charge a premium price for its product.

Answer 128

A graph that tracks sales of each individual product over time in value (£) or volume (number of units). It is an important concept in marketing. - It describes the stages a product goes through from when it was first thought of until it is finally removed from the market. - Each product has its own product life cycle, so not all products reach this final stage. Some continue to grow and others rise and fall. - E.g. 'fads' may experience a fast growth and decline in sales whereas some products will stay in the 'maturity' stage for many years. - Some products have longer cycles than others, e.g. the Mars Bar was launched in the 1920s and is still going strong, whereas modern motor cars are expected to have a life cycle of about 10 years.

Answer 129

1) Research & Development (R&D) 2) Introduction 3) Growth 4) Maturity 5) Decline

Answer 130

- Market research is carried out, the idea for the product is developed and prototypes produced. - This is an expensive period for the company as no sales are made as the product is not yet available. - Cash flow is expected to be negative.

Answer 131

- Sales begin and start slowly as consumers are getting to know the product with the product's initial appearance on the market. - Costs will remain high and cash flow will remain negative. - This stage will involve a lot of expenditure on promotion. - The firm will need to convince their distributors to stock the new product. - The price may have to be high to recoup the high initial launch costs. - The failure rate for new products is high - 60% to 90%.

Answer 132

- At this stage, sales are accelerating fast. - People are beginning to buy more of it and it is becoming successful. - More outlets are selling the product. - The firm should start to break even on costs and begin making a profit. - Cash flow can improve considerably. - The business' profits per unit sold are likely to be at maximum because firms tend to charge a high price at this stage, particularly is the product is innovative. - Firms with a technically superior product may well engage in price skimming. - The growth stage is critical to a product's survival, and its success rate will depend on how competitors react to it.

Answer 133

- At this stage, the sales rate begins to slow down (sales curve peaks and begins to decline). - Both cash flow and profits also may decline slowly. - This stage is characterised by intense competition with other brands. - Competitors emphasises improvements and differences in their versions of the product. - At this stage, consumers of the product know a lot about it and require specialist deals to attract their interest. - The firm should start to consider extension strategies to keep sales up.

Answer 134

- Sales begin to fall rapidly as the product becomes less popular. - New technology or a new product may cause product sales to decline sharply. - When this happens, marketing managers consider eliminating unprofitable products. - Promotional efforts will be cut too. - Unless, a firm may make the decision to boost sales again by spending more on marketing. - Extension strategies?! - may be too late.

Answer 135

Marketing actions taken to prolong the life of a product - extending the maturity phase. - This is because researching, developing and launching new products is both risky and expensive so businesses will try to prolong the life of their products onto the market for as long as possible. - Maintaining or reviving the sales levels of their products over time using a number of techniques (product life extension strategies). They can be used in combination with each other.

Answer 136

- Advertising: run promotional campaign to increase awareness of product or remind existing customers - change perception of product. - Reduce price to increase sales, e.g. loss leader. - New features/functionality - iPhones 4,5,6,7,8, X, etc. - Finding new markets/segments for existing products. Some companies selling baby milk have targeted less economically developed countries. - Changing the appearance or packaging. Some motor manufacturers have produced old models of cars with new colours or other features to extend the lives of their products.

Answer 137

- Can attract broader audience - growth. - Brand awareness and brand equity growth. - Facilitates growth and further expansion. - Increased market share. - Market strategy advantage - cheaper to extend rather than launch entirely new product.

Answer 138

- Brand dilution - occurs when a brand loses focus on its offering to a particular audience. - Lost brand reputation if failed extension - may suggest there are other failings within the business. - Damaged relationships with existing customers if failed - customers may feel the brand is not understanding their needs - lost trust after disappointment. - Customers may not recognise the product if packaging/appearance is changed.

Answer 139

Nike: - Initially created as a sports shoe brand called Blue Ribbon, later became Nike. - Grew reputation throughout 1960s/70s to become known as top shoe producer. - Nike used this brand equity and reputation to begin expanding into other categories. - Since mid 1980s, has relied on strategic partnership by collaborating with known stars, e.g. Michael Jordan and Lebron James - basketball category, Tiger Woods - golf category, Wayne Rooney - football. - getting into these markets. - Successful, e.g. in 2020 a pair of Jordans sold for £1.5 million. - Has 30 market segments now.

Answer 140

- Easy to use (just track sales). - Suggest when it's time to use an extension strategy. - Can be used to forecast sales.

Answer 141

- Real sales figures never follow a smooth pattern. - Identifying which phase the product is in may be difficult. - Misreading the graph can lead to wrong decisions.

Answer 142

The range of products that a business sells.

Answer 143

Product portfolio analysis assesses the position of each product or brand in a firm's portfolio to help determine the right marketing strategy for each.

Answer 144

- Ensure sales revenue is maximised across different products. - Offset costs of new products entering the introduction phase with products in the maturity phase, thus generating high returns. - As one product reaches decline, replacements are entering the growth and maturity stages of their lives. - This means that there will be a constant flow of income from products in the mature phase of their lives to finance the r&d of new products.

Answer 145

The Boston matrix allows businesses to undertake product portfolio analysis by plotting their products on a grid or matrix according to each product's market share and its market growth.

Answer 146

- Dog: low market share & low market growth. - Question marks/problem children: low market share & high market growth. - Starts: high market share & high market growth. - Cash cows: high market share & low market growth.

Answer 147

- To suggest a strategy for each of the four products. For example, to invest heavily in 'star' products to maintain or increase their market share and ensure growth in sales. - To identify any significant gaps in the matrix. For example, if a business doesn't have any 'problem children' or '?' this could mean that overall sales may decline in the future as the business will not generate products to replace 'stars'.

Answer 148

MONITOR this product to see whether it has potential to become a star. - If the product doesn't achieve its potential market share it will become a dog. Additionally: - Invest to increase market share. - Substantial investment to achieve growth at the expense of powerful competitors. - Invest in promotion and other aspects of marketing. - Build selectively - be conscious of what you are investing in - could it become a dog product?

Answer 149

INVEST in this product as it has potential for further growth. - Keeping its market share high is key to ensure it becomes a cash cow in the future. - Repel challenges from competitors.

Answer 150

REMOVE this product from the market? - It depends whether it is making a loss and how important it is to the brand.

Answer 151

MAINTAIN this profitable product's market share but do not spend too much on it as sales are unlikely to grow significantly. - Aim for short term profits. - Use profits from cash cows to invest in new products.

Answer 152

- Firms should avoid having too many products in any single category. Obviously, firms do not want lots of dogs, but they also need to avoid having too many stars and problem children. - Products in the top half of the chart (stars and ?) are in the early stages of their life cycle and are in growing markets, but the cost of developing and promoting them will not have been recovered. - Continuing production of cash cows will provide the necessary cash to develop the newer products. - Firms need problem children products as they may become tomorrow's cash cows.

Answer 153

- Market leaders - Fast growing - Substantial profits - Require substantial investment to finance growth + marketing spending - Eventually growth slows + business hopes the star becomes cash cow.

Answer 154

- Rapid growth - Poor profit margins - Enormous demand for cash - Negative cash flow - Have potential, but may need substantial investment to grow market share at the expense of larger competitors. - Could become star or dog.

Answer 155

- Profitable products - Generate more cash than needed to maintain market share - Maturity stage of life cycle - Successful products with relatively little need for investment. - Large positive cash inflow

Answer 156

- Greatest number of products in this category. - Markets are not growing - little new business. - Operate at a cost disadvantage. - Have either failed or in decline stage of life cycle

Answer 157

A balanced product portfolio is when a business has a range of products spread across different stages of the product life cycle and/or Boston matrix. It has: - Cash Cows providing the investment funds for Stars that ensure future success. - Question Marks that use these funds to develop into Stars.

Answer 158

BENEFITS: - Suggest strategies (what to do) for each of the 4 categories of products. - It shows if the portfolio is balanced or not (is there a gap?) WEAKNESSES: - Some products can be borderline. - Isn't always right. - Doesn't actually give answers.

Answer 159

The amount of money a customer is charged for a product or service. - Price is a key factor in any product decision. - Price will not only determine the demand for a product, it will also determine the contribution of a product and the overall profit margin for the business.

Answer 160

- Objectives - Costs - Competitors' prices - Demand - Stage of product life cycle - Elasticity of demand (PED) - Positioning (niche/mass , B2B/B2C) - Fashion / trends - Disposable income - Bargaining power

Answer 161

Pricing strategies are pricing decisions adopted over the medium to long-term to achieve marketing objectives.

Answer 162

- Price skimming - Price penetration - Dynamic pricing - Cost-plus

Answer 163

The price is determined by adding a % markup to the cost of producing a product. Price = cost of making product + markup (profit) E.g. if a jumper costs £20 to make and the business adds a 50% markup, the selling price would be £30.

Answer 164

PROS: - Quick and easy to calculate. - Simple to see that you are making a profit. - Covers all costs. - Requires little research. CONS: - Can be complicated if you want to apply different markups to different products. - Can reduce efficiency. - May not reflect true value of product. - Doesn't take into account customers or external factors such as competition.

Answer 165

Setting a high initial price for a new, often innovative, product in order to recoup high development costs. - When a firm releases a new product it may charge a high price targeting a segment of the market known as 'early adopters'. Once this market has been 'skimmed off' the business may lower the price. - Firms may base their initial promotional campaign around this idea, trying to create a 'must have' mentality amongst their target market.

Answer 166

A type of consumer who is willing to pay a premium price for a new product in order to be one of the first to own it.

Answer 167

PROS: - By setting a high price, the business will achieve limited sales but with a high profit margin on each, which allows the firm to recoup some of the product's development costs. - Early adopters offer organic word-of-mouth advertising for the new product. - Creates the perception of high quality or must-have products. - Can create a higher-end brand image and increased customer loyalty. - Early adopters provide feedback on new products before a wider launch. CONS: - Only works with an inelastic demand curve that doesn't respond to price changes. - Early adopters might become turned off by price decreases after their initial purchase. - May end up with excess inventory if price skimming efforts fail.

Answer 168

Setting a low initial price for a new product in order to get a foothold in the market and gain market share. - Once the product has been launched and built up a customer base the firm may raise the price to boost profit margins. - May be a suitable pricing strategy for entering into a mass market. - Works well for complementary products.

Answer 169

PROS: - Win customers from competitors. - Encourage new customers to try your product by offering discounted price. - Can deter other competitors from entering the market during the promotional period. - Become a market leader. - Benefit from economies of scale - generally aim to have high levels of inventory in expectation of a high inventory turnover. - Encourage organic marketing. CONS: - Requires significant up-front investment - bulk orders - can be relatively high risk. - Can trigger a race to the bottom - competitors may retaliate by cutting their own prices. - Can create the impression that you are a low-quality brand if price is set too low.

Answer 170

When the price changes quickly in response to the ability to supply or to changing levels of demand (flexible). - If demand is high (or at peak times) the price goes up. - If demand is low the price comes down. - This strategy can be used to encourage customers to buy in advance, e.g. 'early bird' offers on holiday or flights.

Answer 171

PROS: - Better market overview. - Increased revenue. - Get to know your customers - will provide you with an overview of various trends. - More control over pricing strategy - allows flexibility. CONS: - Risk of losing customers. - Risk of starting price war. - Can be time consuming - changing prices of products continually requires lots of competitor monitoring and market research, which can take up a lot of employee manpower. - The process is prone to errors - inaccurate market data can cause significant profit losses.

Answer 172

AMAZON: - Changes its prices every 10 mins on average. - Uses advanced algorithms and machine learning to analyse vast amounts of data in real-time. UBER: - Adjusts rates based on number of different variables, including the time and distance of your route, traffic, and the current rider-to-driver demand. - E.g. temporary increase in price in busy periods.

Answer 173

- Price taking - Price makers - Price leadership - Price followers

Answer 174

Price takers set their prices equal to the 'going rate' or the established market price. - A common pricing strategy for small and medium-sized businesses. - Price takers have no influence over the market price, as they are normally one of many smallish firms competing for business.

Answer 175

Able to fix their own price. - An entity that has the power to influence the price it charges because the good it produces does not have perfect substitutes.

Answer 176

Brands who are market leaders whose price changes are followed by rivals. - Used for established products with strong brand images. - The firm using this strategy will probably dominate the market and other businesses will usually follow their lead.

Answer 177

Follow the price-changing lead of the market leader by closely monitoring and responding to the pricing decisions made.

Answer 178

Pricing decisions adopted in the short-term top suit particular situations.

Answer 179

- Loss leader - Predatory pricing - Psychological pricing - Special-offer pricing

Answer 180

Price set below cost-price as a "bait" to entice customers. - Entails setting prices very low (often below cost of production) to attract customers. - Businesses using this tactic hope that customers will purchase other (full-price) products while purchasing the loss leader.

Answer 181

Price set deliberately low by dominant competitor to undercut competitors. - This is illegal.

Answer 182

Price set to trick customers to believe the product is cheaper than it really is. - E.g. £9.99 instead of £10.

Answer 183

This approach involves reduced prices for a limited period of time or offers such as 'three for the price of two'.

Answer 184

Firms would prefer to sell products with demand that is price inelastic. - This gives greater freedom in selecting a pricing strategy and more opportunity to raise prices, total revenue and profits.

Answer 185

- Differentiating products from those of competitors - can increase brand loyalty. Consumers are more likely to continue to purchase a product when its price rises if it has unique characteristics. - Reducing competition through takeovers and mergers. This process results in fewer competitor products being available to the consumer and may mean that demand will be less responsive to price.

Answer 186

The component within the marketing mix that defines both the physical location where a product is available as well as the distribution channel it has travelled through, from manufacturer to consumer.

Answer 187

- Own website - Other websites, e.g. Amazon - Own shop - Retailer - Supermarket - Department store - Market stall - Television shopping channel - Vending machines

Answer 188

- Fit with the rest of the marketing mix. E.g. if a product is to be sold cheaply, possibly to increase market share, a cost-cutting retail outlet might be appropriate so that the benefit of low prices is passed on to the final customer. - Location - businesses will seek outlets and distributors in areas where their target customers live and where few competitors operate. - Credit terms - a newly established or struggling enterprise might opt for outlets or distributors that do not request long periods of trade credit. This can help to protect a business' cash flow. - Willingness to display products in promotional positions. For some products (e.g. foods and confectionary), a good position in a retail outlet is an essential part of successful distribution.

Answer 189

The route to market that a product takes from producers to the final customer. - It will affect the number of intermediaries and hence the price paid by the final customer.

Answer 190

Intermediaries (or middle people) within the distribution channel include wholesalers and retailers.

Answer 191

An intermediary in the distribution channel that buys in bulk and sells to resellers (retailers) rather than to consumers. - Makes profit by buying at a lower price from the producer and adding a profit margin onto the price paid by the retailer.

Answer 192

- Reduce the producer's transport costs (fewer journeys to the wholesaler rather than many journeys to retailers). - Retailers can order in smaller amounts from wholesalers.

Answer 193

Deliver the right goods, right quantity, right place, right time and as efficiently as possible.

Answer 194

- Packaging - Inventory management - Warehousing - Transport - Distribution channel selection

Answer 195

Retailer is the final step in the chain - deals directly with the customer. - Focused on consumer markets.

Answer 196

- Multiples - chains of shops owned by a single company (e.g. Sainsbury's or Next) - Specialist chains (e.g. fast fashion, perfume) - Department stores (e.g. Debenhams, John Lewis) - Convenience stores (e.g. Spar, Costcutter) - Independents - a shop run by an owner. - Franchises (retail format operated by franchisee)

Answer 197

- Traditional - Modern - Direct

Answer 198

Selling through wholesalers (long) Producer -> wholesaler -> retailer -> consumer - Many small retailers buy stock from wholesalers, as they do not purchase sufficient quantities to buy directly from producers. - Wholesalers offer other benefits besides small quantities, such as advice, credit and delivery, although this can be expensive.

Answer 199

Selling through retailers. Producer -> retailer -> consumer - Major retailers such as Tesco purchase directly from manufacturers and arrange their own distribution. - They can do this because they buy huge quantities of products and are able to negotiate large discounts that more than cover the costs of distribution. - As a consequence, they can offer discounts to customers, enhancing their market position.

Answer 200

Selling directly to consumers (short) Producer -> consumer - This is a rapidly growing channel of distribution. - It is attractive to many firms because it lowers the prices at which they can sell products to the consumer. - Many small businesses have started to sell their products directly to customers using the internet.

Answer 201

PROS: - No wholesaler or retailer involves therefore no 'cut' taken - full price (B2C price), meaning products can be sold at lower prices, increasing demand and sales. - Often the quickest. - Control over the way the product is distributed. CONS: - Postage costs. - May need delivery service. - Need to provide customer service in individual customers. - Sales in smaller volume therefore higher distribution costs (multiple destinations). - Smaller reach therefore high marketing costs.

Answer 202

PROS: - Way to overcome high marketing costs as a retailer will have larger reach. - Product will be well known as it is in multiple locations. CONS: - Won't receive full price consumer pays (retailer margin) - If there are lots of retailers, it will increase distribution costs.

Answer 203

PROS: - No contact with final customer (B2B only) = lower costs. - Dealing with few customers and in large quantities. - Less distribution/logistics costs - Less risk. CONS: - Lower price (B2B price as each intermediary adds their mark-up) - No control over the way the product is distributed (could damage the brand image). - Less able to provide effective customer service.

Answer 204

Where businesses use more than one type of distribution channel. - Consumers today expect to be able to access products and services in a variety of ways: in shops, online and click & collect.

Answer 205

PROS: - Open 24/7 - Different prices for different channels (could also be a con) - Increased brand awareness/visibility - Access to customer feedback (extensions?) CONS: - Costs may be increased (shops + website) - Lack of consistency of customer service - PED < -1 increase? (customers get used to internet prices)

Answer 206

- The type of product - Control over promotion and pricing - Cost of distribution - Customers' expectations - Geographical location - The nature of the market - The technical complexity of the product

Answer 207

- Some products are difficult to transport because of their bulk, fragility or perishable nature. - These are more likely to be distributed 'direct' to reduce delivery time. - Producers selling large amounts of relatively low-priced products are more likely to use a wholesaler as it is expensive to store large amounts of products.

Answer 208

- A business may opt to use its own website or retail chain to control the way the product is sold, displayed, promoted and the price at which its sold

Answer 209

- The more intermediaries involved in the chain of distribution, the more costs will be added as each business involved in the distribution of the product will add to the initial cost of producing the product. - This will make the product more expensive.

Answer 210

- The way customers are expecting and willing to access the product: do they need to see, touch, try the product before purchasing? - Do they expect to be able to buy it online?

Answer 211

- A product sold internationally may require distribution through networks of wholesalers. - By contrast a local business may simply require one retail outlet.

Answer 212

- Businesses selling in dispersed markets usually require the services of wholesalers as they have the resources to supply in these circumstances.

Answer 213

- Technically complex products (such as laptops) are better distributed when the customer and the producer can easily contact each other to solve problems of installation or operation.

Answer 214

The buying and selling of goods and services online.

Answer 215

PROS: - Reduces costs - Reduces risk - Larger amount of potential customers - Open 24/7 - Range of payment options CONS: - High levels of competition - Needs employees with skills in e-commerce - Customers have to wait for products to be delivered.

Answer 216

Buying and selling goods and services using a mobile phone.

Answer 217

PROS: - Convenient for busy customers. - Easily integrate marketing and sales. - Integrates well with traditional retail. - Direct communication, e.g. push notifications. CONS: - Requires technological literacy. - Fraud and security concerns. - Competitors also using m-commerce. - Needs to be responsive and easy to use.

Answer 218

Digital marketing refers to any online marketing methods: - email marketing - pay-per-click advertising - social media marketing - blogging, etc.

Answer 219

PROS: - Cheaper vs traditional marketing - More targeted - Marketing analytics - Global reach - Allows to personalise the message (using a customers' name) - Enables to suggest similar products (you may also like) CONS: - Privacy - New costs... cloud - Can't touch product. - Misses out customers who are not online or don't use a device. - Customers can opt out of Cookies and receiving marketing messages.

Answer 220

Traditional marketing comes in the form of newspapers, radio or TV advertising. - The internet and e-commerce has meant that businesses are now using digital marketing instead.

Answer 221

- Using the business' own website - SEO: search engine optimisation - SMM: social media marketing - PPC: pay per click - Email marketing: customer data - Influencer marketing: large audiences

Answer 222

- Businesses can gather more detailed information about consumers and build relationships with them. This is illustrated by the way in which Amazon continually recommends products based on past shopping purchases. - There is greater contact between consumer and business, allowing consumers to build their own products and give reviews of products or services purchased. - Social media has also become very important and should not be underestimated from a business point of view. If a business can tap into social media with its marketing, this can be a very cost-effective way of boosting sales. - Digital marketing makes it very easy for any business to set up and sell almost anywhere in the world.

Answer 223

Promotion is the component of the marketing mix that attracts, informs and persuades customers about the product in order to sell that product.

Answer 224

- To attract new customers and retain existing customers. - To improve the position of the business in the market. - To ensure the survival and growth of the business. - To increase awareness of a product.

Answer 225

The combination (choice) of promotional methods/activities that a firm uses in order to create consumer awareness and generate sales by informing them of their products and to persuade them to buy these products.

Answer 226

- Advertising - Sales promotion - Personal selling - Merchandising - Public relations (PR) - Branding - Packaging - Exhibitions and trade fairs - Social media - Viral marketing - Direct selling - Sponsership - Collaborations/influencers

Answer 227

Above the line marketing: - The more traditional types of promotion such as TV ads, radio ads, and giant billboards are designed to reach a mass market. Below the line marketing: - The more niche promotional activities such as targeted online ads are designed to reach just the customers they want.

Answer 228

A paid form of non-personal communication using mass media to change the attitudes and buying behaviour of consumers. It can be separated into two types: - Informative advertising: this is designed to increase consumer awareness of a product by providing consumers with factual information. Such adverts centre on the prices and features of the products being advertised. - Persuasive advertising: this attempts to get consumers to purchase a particular product by, for example, claiming that the product is better than the competition.

Answer 229

PROS: - Wide coverage - Can be repeated to create brand awareness. - Is expensive making it a barrier to entry for smaller businesses. CONS: - Usually very expensive. - Lacks targeting.

Answer 230

Short-term incentive (tactic) to increase sales which are special offers reducing the price of a product or service. Examples include: - special offers - 'buy-one-get-one-free' (BOGOFs) - coupons - vouchers - free samples - 3 for the price of 2, etc.

Answer 231

PROS: - Encourage customers to try out a product. - Help reach sales targets - Increase market share - Only works if PED < -1 CONS: - Customers may become unwilling to pay full price.

Answer 232

Promotional info directed by mail, text, social media, etc.

Answer 233

PROS: - Focused on target market - Can be personalised. - Usually cheaper than advertising CONS: - Can be perceived as intrusive and junk mail.

Answer 234

Involves visits by a business' sales representative to prospective customers. - May be used more in business-to-business (B2B) selling when selling customised or made to measure products, technically sophisticated products or expensive products such as double glazing.

Answer 235

PROS: - 1-2-1 service tailored made to customer - customer will feel valued. - Enables customisation and negotiations. CONS: - Relatively expensive form of promotion as it requires paying sales staff and each staff can only visit a limited number of potential customers. - Labour intensive = high costs - May be intrusive. - Low number of customers can be targeted.

Answer 236

This form of marketing uses social media and social networks like Facebook, X platform (formerly Twitter) or Instagram to market products/services, engage with existing customers and reach new ones.

Answer 237

PROS: - Brand awareness - Engagement - Increased sales - Communication - Analytics CONS: - Other people using social media are allowed to comment under posts, e.g. sharing negative opinions about the business, which could lead to poor brand reputation, bad word-of-mouth promotion, etc.

Answer 238

PR is communication through media (press, TV, YouTube, etc.) - Promoting the business' image to establish a favourable public attitude towards the company. - It aims to improve the image of a business and its products in the expectations of increasing sales through sponsoring sporting or cultural events or making donations to worthwhile causes.

Answer 239

PROS: - Enhance the image of the product or business. CONS: - The communication isn't always controlled by the business (e.g. bad reviews).

Answer 240

Making a financial contribution towards an event.

Answer 241

This is in-store promotional activity by manufacturers or retailers at the point of sale. - E.g. aisles or window displays. - Merchandising can be very important when consumers make purchasing decisions at the point of sale and a variety of rival products are on display in stores - confectionary is an example.

Answer 242

PROS: - Can be relatively cheap. CONS: - Not good at targeting specific groups of consumers.

Answer 243

Packaging emphasises the attractiveness of the product and informs the customers of its features. - It also protects the good during its distribution to ensure that it reaches the consumer in perfect condition. - It can also add value by making usage more convenient, e.g. a squeezable bottle of Ketchup rather than glass one.

Answer 244

- Reflects the brand. - Adds value. - Premium packaging boosts sales. - Makes products stand out.

Answer 245

These are events staged to attract all those people involved in a particular market, both sellers and buyers. - An example is the Motor Show held in Birmingham each year.

Answer 246

This style of promotion relies on an audience to organically generate and push the message of a product/service. - On social media, marketing is considered "viral" when it's being shared rapidly by the public at large (with compounding effect) rather than just its target audience.

Answer 247

PROS: - If successful: cost effective, massive reach is possible, exponential growth. - Enhanced brand awareness: sharing 'indirectly' endorses the brand. - If the content is engaging leads to increased 'brand interaction': lead to increased trust levels and credibility. CONS: - Very uncertain outcomes: unpredictable therefore could be a huge waste of resources. - If goes 'viral'... control over how content is portrayed is lost: reputation issues -> damage brand. - Often 'short lived' even in most successful campaigns: huge bursts of attention fades rapidly. - Hard to replicate: not a long term strategy.

Answer 248

A brand is a unique and recognised feature of a business or product such as name, shape, logo, colour, etc. It distinguishes the business from competitors.

Answer 249

Methods to increase customers' recognition of a brand, e.g. name, logo, design, sign, colour, or slogan. - This establishes an identity for a product that distinguishes it from the competition. - If successfully done, it can allow higher prices to be charged and can extend the product's life cycle by creating customer loyalty. - It can create brand loyalty when consumers regularly purchase particular products and it can allow firms to charge higher prices.

Answer 250

- Brand loyalty and repeat sales. - Can charge a higher price. - New product launches are likely to be more successful. - Easier to enter new markets. - Act as barrier to entry (prevent new competitors coming in) - Limits impact of economic down turn.

Answer 251

- Makes a product recognisable and provides a USP (charge premium price). - Adds value to the product. - Provides the business a competitive advantage. - Builds trust and enables brand extension. - Reduces price elasticity of demand. - Means that less money needs to be spent on promotion: promoting the brand can increase sales of all products in a business' portfolio. - Can represent an intangible asset.

Answer 252

A strong brand means that consumers are familiar with or loyal to the brand and therefore more likely to be willing to try new products launched under that brand. - It also means that new products under that brand name are more likely to be successful.

Answer 253

As branding creates loyalty, consumers are less likely to swap to a substitute product even if one is available. - This is because the branded product is perceived to be better than its competitors. - This makes the consumer less sensitive to changes in price.

Answer 254

A strong brand is a way to differentiate a business' product from those of its competitors. - Leading to more sales, higher market share and profits.

Answer 255

A strong brand can add value to the 'non-current assets' of a business on its balance sheet meaning that a business can sell a product with a strong brand to another business for a large amount of money.

Answer 256

- The product's position in its life cycle. - The type of product. - The finance available to the business. - Where consumers make purchasing decisions. - Competitors' actions. - Technology available.

Answer 257

- A newly launched product is likely to need heavy advertising to inform customers of its existence and the benefits it provides. - For an established product, sales promotions may be used to persuade customers to buy it.

Answer 258

- For expensive products and those where design is a major element, greater use will be made of exhibitions and trade fairs in the promotional mix. - This element of the mix is important, for example, to firms selling homes and fashion products. - Products with elastic PED benefit more from promotion.

Answer 259

- Firms with larger budgets may engage more in public relations and personal selling, as these methods of promotion are expensive.

Answer 260

- For businesses that sell products that are purchased on impulse, often at the point of sale, merchandising and packaging may be particularly important. - The attractiveness of the wrappers and the positioning of the product within shops may be vital.

Answer 261

- If a business' rivals are engaging in heavy advertising or extensive sales promotions, it is likely that the business will respond similarly. - This is more likely if the business trades in a market where there is relatively little product differentiation.

Answer 262

The people who make contact with customers in delivering the product. - The staff who come into contact with customers during the purchasing process.

Answer 263

- Long wait times - Poorly trained staff - Rude staff - Not being active on all channels - Slow response times - Being passed around - Automated things you get stuck in - bots / phone systems / etc.

Answer 264

- Loss of reputation - Bad reviews - Negative word-of-mouth - Low level of loyalty - Low level of repeat purchases - Sales and market share will fall

Answer 265

The people involved with selling a service or a product are crucial and can make or break a sale, including telephone queries, to direct face-to-face interactions. - A customer's first impressions of a business are important and it is essential that the people offering advice or delivering the service are interested, helpful and polite. - Employees should be well trained and motivated, as good customer service can enhance a business' reputation, sometimes providing a USP and increased brand loyalty.

Answer 266

The systems and processes that deliver a product to a customer. It relates to the whole process of buying a product/service, from entering a business premises or going on a website to delivery of the product/service and the after-sales service offered. - In store and online purchasing experience. - How user friendly the website is. - Order confirmation via emails, tracking, etc. - Are products delivered on time? The efficiency of the service can have a significant impact on the level of sales and revenue.

Answer 267

The elements of the physical environment the customer experiences - the quality of the premises that the customer needs to visit (cleanliness, decor, lighting, accessibility, etc.) - It is important a business gives the right impression to consumers. - The premises of a business selling a luxury product should be located in a more upmarket area and the decor should reflect the nature of the product. - Is also relevant to the layout and structure of virtual stores, and websites.

Answer 268

Air passengers expect attractive and stimulating environments, such as interesting departure lounges, with activities for young children, etc.

Answer 269

Hairdressing salons are expected to provide pleasant waiting areas, with attractive reading materials, access to coffee for customers, bright lighting, etc.

Answer 270

An integrated marketing mix means that the individual elements complement each other to communicate a coherent message to customers.

Answer 271

Product: high quality in terms of design, innovation, features or functions. - Price: likely to be high (skimming) to reflect premium nature of the product. - Place: outlets should reflect the quality or exclusivity of the product. - Promotion: targeted at people who are likely to purchase the product. - Physical environment: reflect the premium nature of the product. - People: well-trained and motivated in order to deliver the customer service necessary for a more exclusive premium product. - Process: consumers should find the whole process first-rate, from the decision to purchase to the delivery of the product or service.

Answer 272

If the marketing mix is inconsistent, consumers may be deterred from purchasing the product, thereby depressing sales and profits. - In the case of a premium product, a low price might be a mistake as it may lead some consumers to think that the product is not of premium quality. - Marketing mixes can be integrated in different ways depending on different factors. - For example, easyJet and Rolls Royce have markedly different marketing mixes but both are integrated and therefore very successful.

Answer 273

- Position in the product life cycle - The Boston matrix - Type of product - Marketing objectives - The target market - Competition - Positioning

Answer 274

A firm may use 'price skimming' when launching a product onto the market ('introduction' phase) and then lower the price as sales start to increase ('growth' phase).

Answer 275

A firm may increase promotional spend on a 'problem child' to help it gain market share.

Answer 276

A firm may invest in training shop assistants if the product has many tangible and augmented features.

Answer 277

A firm with an objective to gain market share might use multi-channel distribution to reach as many customers as possible.

Answer 278

If the target market includes affluent customers with high disposable income a firm may ensure that the physical environment is attractive to this type of customers.

Answer 279

A firm may respond to competitors' actions by lowering prices or increasing promotional spend.

Answer 280

A firm may alter its product to be tailored more specifically to an identified target market or segment of the market.

Unit 3 Flashcards

Marketing management