Unit 3: Marketing Flashcards
(148 cards)
1
Q
Define marketing objectives
A
The goals set for the marketing department to help the business achieve its overall (corporate) objectives.
2
Q
Define marketing
A
The management task of identifying and meeting the needs of customers profitably by getting the right product at the right price to the right place at the right time.
3
Q
Examples of marketing objectives?
A
- Share of the market, to gain market leadership.
- Total sales.
- Avg. no. of items purchased per customer visit.
- Frequency of shopping by loyal customers.
- Percentage of customers who return.
- no. of new customers.
- Customer satisfaction.
- Brand identity.
4
Q
To be effective, marketing objectives could:
A
- Be linked to corporate objectives to help businesses achieve targets.
- Be determined by senior management.
- Be realistic, motivating, achievable, measurable and communicated clearly w/ other departments.
5
Q
Why are marketing objectives important?
A
- They provide a sense of focused direction for the marketing department and help the business achieve its objectives,
- Business success can be measured against the targets set by objectives.
- Marketing objectives can be broken down into regional and product sales targets.
- Marketing objectives form the basis of marketing strategy.
6
Q
Define corporate objectives
A
Well-defined and realistic goals that are set for the whole country.
7
Q
Define marketing strategy
A
A plan of action giving details of how a business intends to achieve its marketing objectives by creating competitive advantage.
8
Q
Define equilibrium price
A
The price level at which demand is equal to supply.
9
Q
Define demand
A
The quantity of a product that consumers are willing and able to buy at a given price in a specific time period.
10
Q
Define supply
A
The quantity of a product that firms are prepared to supply at a given price in a specific time period.
11
Q
Define market segment
A
A subgroup of a whole market in which consumers have similar characteristics.
12
Q
Define industrial market
A
The selling of products by businesses to other businesses (B2B).
13
Q
Define consumer market
A
The selling of products by businesses to the final end user (B2C).
14
Q
Define customer (or market) orientation
A
An outward-looking approach that bases product decisions on consumer demand, as established by market research.
15
Q
Define product orientation
A
An inward-looking approach that focuses on making products that can be made - or have been made for a long time - and then trying to sell them.
16
Q
What are benefits of customer orientation
A
- Chances of newly developed products failing in the market are reduced due to effective market research.
- Products based on consumers’ needs will have a longer lifespan and be more profitable than those that are sold using a product-led approach.
- Feedback from customers allows the product and method of marketing to be altered to suit changing tastes before competitors.
17
Q
Limitations of customer orientation
A
- Frequently updating market research is expensive.
- A business may waste its resources if it tries to respond to every passing consumer/market trend.
- Expensive for a business to offer sufficient choice/range to meet every consumer need.
NOTE:
- Product-oriented businesses researching and developing an innovative product can still lead to high sales and profits.
18
Q
Define market size
A
The total value/quanitity of sales of all producers within a market in a given time period.
19
Q
Define market growth
A
The percentage change in the total size of a market (volume or value) over a period of time.
20
Q
What factors does the rate of market growth depend on?
A
- A country’s rate of economic growth.
- Changes in consumer incomes.
- Development of new markets & products that reduce sales in existing markets and products.
- Changes in consumer tastes.
- Technological change, which can boost market sales.
- Whether the market is saturated bc most consumers already own the product.
21
Q
What are the implications of changes in market growth?
A
Increased market growth:
- Sales increase if market share remains the same.
- Can increase prices and profit per unit.
- Increased sales could lead to cost savings.
- More businesses attracted to the market, increasing lvl of competition.
Decreased market growth:
- Sales will increase more slowly even if the business’s market share remains the same.
- Competitors might reduce prices to increase sales in a slow-growing (or shrinking) market.
- Lower prices may result in lower profit per unit.
Businesses may consider expanding into faster-growing markets.
22
Q
How to calculate market share?
A
Sales of the business in time period/Total market sales in time period x 100
23
Q
Define brand leader
A
The brand with the highest market share in the market.
24
Q
Implications (impacts) of an increase in market share?
A
- Sales are rising faster than competing businesses in the same market, which leads to higher profits.
- Retailers will be keen to stock and promote the best-selling brands.
- Businesses w/ brand leader label can reduce discount rate for retailers, leads to higher profitability for producer of brand.
- An item or brand is the market leader which can be used in advertising/promotional material, making consumers want to buy these popular brands.
25
Implications (impacts) of a decrease in market share?
- Sales likely to decrease unless there is rapid market growth.
- Retailers will be less keen to stock and promote the product.
- Larger discounts to retailers may be offered.
- Product may no longer be a brand leader.
26
Define consumer products
Goods or services sold to end users.
27
Define industrial products
Goods or services sold to businesses.
28
What are consumer products classified into?
- Convenience products - frequently purchased/bought on impulse & sold to a large target market (e.g, sweets, bread).
- Shopping products - Requires some planning and research by consumers before being purchased - not bought frequently (e.g, washing machines).
- Specialty products - Bought infrequently, often expensive and with strong brand loyalty (e.g, cars/designer clothing).
29
What are industrial products classified into?
- Materials & components - needed for production to take place (e.g. steel and electric motors for washing machines).
- Capital items - equipment, machinery, vehicles.
- Services and supply - Business services & utilities.
30
Key differences between selling to businesses rather than consumers?
- Most industrial products are more complex than consumer products so specialist sales employees and support services are important with B2B selling.
- Industrial buyers have more market power and are better informed than the average consumer. They need to be sold products by well-trained and experienced sales employees.
- Industrial buyers dont buy on impulse.
- Traditional mass media advertising and sales promotions techniues are not used in industrial markets.
- Mass marketing in consumer markets is a common strategy but in most industrial markets there are few buyers, so products need to be altered to suit the needs of a buyer.
31
Define mass marketing
Selling standardized products or ranges of products in the same way to a whole market.
32
Define niche marketing
Identifying and exploiting a small segment of a larger market by developing differentiated products to suit that segment.
33
What are the advantages and disadvantages of mass marketing?
Advantages:
- High sales of a standard product can lead to lower average costs of production.
- Cost advantages can lead to lower prices to consumers which helps reinforce position of product in the market.
- Mass marketing can lead to extensive publicity for the business and its product leading to clear brand identity.
Disadvantages:
- Lack of differentiated products/marketing doesn't appeal to many customers.
- Focus on brand image does not help establish a premium brand image for the product.
- Technological/external changes can lead to fall of demand of standardised product.
34
What are the advantages and disadvantages of niche marketing?
Advantages:
- Small businesses can survive and thrive in markets that are dominated by larger firms.
- An unexploited niche has no competitors. Can therefore sell for high prices and high profit margins until competitors react by entering as well. Consumers pay more for an exclusive product.
- Niche market products and exclusive marketing can be used by large firms to create status and image.
Disadvantages:
- No economies of scale.
- Limited scope for business growth if niche market has few customers.
- Business is vulnerable to market changes if it operates in only 1 niche market (risk strategy).
- If profitable, can attract competitors, leading to lower prices/profitability.
35
Define market segmentation
The identification of different groups of customers w/ common needs within a market and the marketing of different products or services to those customer groups.
35
Define consumer profile
A quantified picture of a business's consumers, showing data about their age groups, income levels, location, gender, and social class.
36
What are the three methods of market segmentation?
1- Geographic differences
- The way products are promoted in a region is influenced by language, culture, religion and values and abiding by legal formalities.
2- Demographic differences
- Study of population data & trends & demographic factors such as age, gender, income, family size, social class, and ethnic background, which are used to segment the market.
- Income & social class are important demographic factors to identify socioeconomic groups to segment the market.
3- Psychographic factors
- Factors to do with differences between people's lifestyles, personalities, values, and attitudes, influenced by an individual's social class.
- Common values and opinions are similarly used to group consumers, for example, those who show an interest in ethical business practices are likely to purchase organic foods (which are more pricey).
- Personality characteristics (difficult to measure) influence consumption decisions. Business advertising attempts to appeal to consumers who share a certain characteristic.
37
Advantages of market segmentation?
- Businesses can precisely identify the target market to design and produce goods that are aimed at these groups, leading to increased sales.
- It enables the identification of gaps in the market and groups of consumers that aren't being targeted, which might be successfully exploited.
- Differentiated marketing strategies can be focused on different target markets. Avoids wasting money on trying to sell products to the whole market.
- Small firms unable to compete in the whole market can specialize in one or two segments.
- Price discrimination between consumer groups can be used to increase revenue and profits.
38
Disadvantages of market segmentation?
- R&D and production costs are high due to needing to make and market dif product variations.
- Promotional costs are high, as different advertisements and promotions are needed to market segments.
- Production and inventory holding costs will be higher than for producing and selling just one undifferentiated product.
- By focusing on one or two limited market segments, excessive specialization may lead to problems if consumers in those segments change their purchasing habits significantly.
- Extensive market research is needed to identify market segments and their needs.
39
Define customer relationship marketing (CRM)
Using marketing activities to build and establish good customer relationships so that the loyalty of existing customers can be maintained.
40
How to develop effective long-term customer relationships?
- Targeted marketing - giving customers products/services they have indicated (records of past purchases).
- Customer service and support.
- Communicate regularly with customers - giving frequent updates on new products/special offers/new features/new promotions & support services.
- Using social media - CRM's use socials to communicate/track customers so they can make accurate decisions abt which products to supply to satisfy customers' needs.
41
Benefits of CRM (customer relationship marketing)
- Cost-effective.
- A sustainable strategy creating long-term customers, unlike 'special price offers' or similar promotions.
- Loyal customers often recommend the business to friends/family, providing additional marketing benefit at no cost.
- It costs less per customer than trying to attract new customers (therefore, fewer customers are going to competitors).
42
Costs (drawbacks) of CRM (customer relationship marketing)
- IT systems and software are needed and employees need to be trained to respond to customer feedback.
- Effective CRM campaigns require the use of external marketing consultancy at a high cost.
- CRM needs an existing customer base to be established first before investing in CRM. If not done, costs will not lead to higher sales.
- Costly and time-consuming to respond to each customer's feedback, esp if it contains special requests/requirements.
43
Define market research
The process of collecting, recording and analyzing data about customers, competitors and the market.
44
What are the purposes of market research?
- Reduce the risks of new product launches - it is risky & expensive. Failure to meet sales targets is damaging to a business. Researching demand for a new product allows a business to assess likely chances of success.
- Identify consumer characteristics - So products can be targeted at appropriate market sector.
- Explain patterns in sales of existing products and market trends.
- Predict future demand changes - Demand lvls for existing products could change.
- Assess the most popular designs, promotions, styles and packaging for a product.
45
Define primary research
The collection of first-hand that is directly related to the needs of the business.
46
Define secondary research
The use of existing data that was originally collected for another purpose.
47
Advantages/usefulness of secondary data?
- Provides info about the population, economy, the market conditions that a business operates in.
- Helps to identify key areas of market info that primary research needs to focus on.
- It provides evidence that can be used as a baseline against which primary research data can be compared.
- Large samples often used, increases accuracy/reliability.
- Can be accessed through internet.
- May be the only option if time/finance is limited.
- Big data, many sources.
48
Limitations to the usefulness of secondary data?
- Data may be out of date, leads to inaccurate conclusions.
- Data collected may not suit direct needs of the business/irrelevant.
- Not all secondary data is available for all, expensive to obtain.
- Secondary data may indicate the potential for a new market, but primary research will be needed to gather specific info on consumers.
- Data is big so it is costly and difficult to analyze and be useful for an individual business.
49
Advantages/usefulness of primary data?
- To find out about new markets for innovative products.
- To collect data for specific needs for the business/is relevant.
- To gather qualitative data which supports and helps to explain quantitative data.
- To focus research on market reaction to specific changes made by the business, eg lower prices/increased advertising.
- To gain info from particular target group of consumer.
- When data needs to be cross-checked for accuracy.
50
Define qualitative data
Non-numerical data, which provides insight into the detailed motivations of consumers and helps to explain their buying behavior or opinions.
51
Define quantitative data
Numerical results from research that can be statistically analyzed.
52
Limitations of the usefulness of primary data?
- The selection of a sufficiently large & representative sample influences the accuracy of data.
- Difficult for business start-ups to finance detailed primary research.
- Newly formed businesses have no customers yet to gain important data from.
- Time-consuming to collect and analyse.
53
Define sampling
The process of selecting a group of respondents from a larger population.
54
Define sample
A group of people taking part in a market research survey selected to be representative of the overall target market.
55
What are the limitations of sampling?
- Sample may be too small - Unsuffcient, may not be representative of target consumer/market.
- Risk of sampling bias - as its impossible to ask 100% of target population.
- Researchers may not use the most appropriate methods of sampling - Convenience sampling leads to inaccurate data.
56
Define sampling bias
When a sample is not a good representation of the whole population, because it is chosen in ways which give some people a greater chance at being selected.
57
What points have to be considered when collecting market research data?
Reliability of data collected:
- Secondary data can be unreliable bc of being out of date, irrelevant, incomplete/unavailable.
- Primary research may be unreliable bc of sampling bias - questionaire bias - other forms of bias such respondent not answering in a truthful way.
Analysis of quantitative data
- Numerical data is of raw form, hence, data is of no value if it is not interpreted/analyzed accurately.
Analysis of qualitative data
- This aims to understand why consumers behave in a certain way/react to launch of new product. Answers are based on opinions, attitudes, and beliefs.
- It can provide useful insights into customer needs/wants.
- Responses are recorded and categorised into labels using 'coding'.
- Interpretation of information presented in tables, charts, & graphs.
- This is to make info easier to understand for decision-makers.
58
Define arithmetic mean
The value calculated by totalling all the results and dividing by the number of results.
- Used as an indicator of likely sales level per period of time.
- Used for making comparisons for sets of data.
59
Define mode
The value that occurs most frequently in a set of data.
- Used for inventory ordering purposes.
60
Define median
The value of the middle item when data has been ordered or ranked. It divides the data into 2 equal parts.
- Used in wage negotiations.
- Used in advertising (e.g., 'our products are always in the best-performing 50% of brands').
61
Mean: Advantages & Disadvantages
Advantages:
- Includes all of the data in its calculation.
- The most well-known average; widely used and easily understood.
Disadvantages:
- Affected by one or two extreme results.
- Usually not a whole number.
62
Mode: Advantages & Disadvantages
Advantages:
- Easily observed/no calcs necessary.
- Result is a whole number & easily understood.
Disadvantages:
- Doesn't consider all of the data, therefore cannot be used for further statistical analysis.
- May be more than 1 modal result - causes confusion.
63
Median: Advantages & Disadvantages
Advantages:
- Less influenced by extreme results than the mean, meaning it could be more practical/accurate to use.
Disadvantages:
- Calculation from grouped data is complicated.
- An even number of results means the value is approximated.
- Cannot be used for further statistical analysis.
64
Define range
Difference between the highest & lowest value.
65
Define coding
The process of labelling and organising qualitative data to identify the main themes and links between them.
66
Define product
Goods or services that are the end result of the production process and are sold on the market to satisfy customer needs.
67
Define marketing mix
The four key decisions on product, price, promotion and place that must be taken to enable the effective marketing of a product.
68
What are the 4P's?
- Product
- Price
- Promotion
- Place
69
Define goods
Products that have a physical existence, such as washing machines and chocolate bars.
70
Define services
Products which have no physical existence, but satisfy consumer needs in other ways, such as hairdressing, car repairs, childminding and banking.
71
Define brand
An identifying symbol, name, image or trademark that distinguishes a product from its competitors.
72
Define intangible attributes
The subjective opinions of customers about a product, which cannot be measured or compared easily.
73
Define tangible attributes
The measurable features of a product, which can be easily compared with other products.
74
Define new product development (NPD)
The design, creation and marketing of new goods and services.
75
Why is New Product Development (NPD) important?
- Changing consumer tastes and preferences.
- Increasing competition.
- Technological advancement.
- New opportunities for growth.
- Risk diversification.
- Improved brand image.
- Use of excess capacity.
76
For a product to succeed, what criteria are needed?
- To have desirable features that consumers are prepared to pay for.
- Be sufficiently different from other products to make it stand out (USP).
- Be marketed effectively to consumers, who need to be informed about it.
77
Define unique selling point (USP)
The special feature of a product that makes it different from competitors' products.
78
Define product differentiation
The unique qualities of a product that lead to a difference between a product and its competitors' products.
- Creates USP & a competitive advantage.
79
Benefits of an effective unique selling point (USP)
- Promotion that focuses on the differentiating feature of the product or service.
- Opportunities to charge higher prices due to exclusive and unique features, design or customer service - higher prices should lead to higher profit margins.
- Higher sales compared to undifferentiated products.
- Customers being more willing to be identified with the brand because it is different.
80
Define product positioning
Consumers' view of a product or service as compared to its competitors.
81
Define product portfolio analysis
Analysing the range of existing products of a business to help allocate resources effectively between them.
2 techniques:
- product life cycle
- Boston Matrix analysis
82
Define product life cycle
The pattern of sales for a product from launch to withdrawal from a market.
83
Describe the significance of each stage in the product life cycle
1) Introduction - Product launched; sales are low and increase gradually; exceptions such as new music.
2) Growth - Sales grow if product is effectively promoted; doesn't last forever; sales growth will begin to slow gradually over a period of time.
3) Maturity/saturation - sales fail to grow but do not significantly decline. The saturation of consumer durables market is caused by most consumers already having the product they want.
4) Decline - Sales decline steadily; extension strategy in this phase will not work; product is obsolete the only option is NPD and for product to be withdrawn from the market. Newer products from competitors are likely the cause of declining sales and profits.
84
Define consumer durable
A manufactured product that can be re-used and is expected to have a reasonably long life, such as a car or washing machine.
85
Define extension strategy
A marketing plan to extend the maturity stage of the product before a completely new one is launched.
86
The marketing mix and the phases of the product life cycle: INTRODUCTION
- Price - may be high (skimming) or low (penetration) compared to competitors' prices.
- Promotion - High lvls of informative advertising needed to make consumers aware of the product's arrival in the market.
- Place - In restricted outlets, high-class outlets if skimming strategy is used.
- Product - Basic model with few variations.
87
The marketing mix and the phases of the product life cycle: GROWTH
- Price - If successful, an initial penetration pricing strategy leads to rising prices.
- Promotion - Consumers need encouraging to make repeat purchases and branding will help win customer loyalty.
- Place - In growing numbers of outlets in areas indicated by strength of consumer demand.
- Product - Product improvements & developments to maintain consumer appeal.
88
The marketing mix and the phases of the product life cycle: MATURITY
- Price - As competitors enter the market, prices for the product need to stay at competitive levels.
- Promotion - Brand imaging continues to stress positive differences compared to competitors' products.
- Place - Hifhest geographical spread possible, newer distribution channels.
- Product - New models, colours, and accessories as part of extension strategies.
89
The marketing mix and the phases of the product life cycle: DECLINE
- Price - Lower prices may be needed to sell off inventory, but if product has small niche following, prices could rise.
- Promotion - Advertising likely to be limited and used to inform of lower prices.
- Price - Unprofitable outlets for the product are eliminated.
- Product - Slowly withdraw product from certain markets and prepare to launch new products.
90
Limitations of using product life cycle for marketing decisions
- Based on past or current data and cannot be used to predict the future.
- Sales could crash quickly, no chance to use extension strategy.
- The usefulness of a product life cycle is increased if analysed together with the Boston Matrix.
91
Define Boston Matrix
A method of analysing the product portfolio of a business in terms of market share and market growth.
92
Sector 1 of 4 of Boston Matrix Analysis - CASH COW
Low market growth, high market share: CASH COW.
- A well-established product in a mature market. Sales are high, and promotional costs are low.
- The cash from this product can be 'milked' and invested into other products in the portfolio. Hence the name: cash cow. A business will want to maintain this for as long as possible.
93
Sector 2 of 4 of Boston Matrix Analysis - STAR
High market growth, high market share: STAR
- This is clearly a successful product as it is performing well in an expanding market.
The business will be keen to maintain the market position of this product. Therefore, promotion costs will be high to differentiate their brand. Despite the costs income will likely be high.
94
Sector 3 of 4 of Boston Matrix Analysis - QUESTION MARK
High market growth, low market share: QUESTION MARK.
These consume resources but generate little return. If it is a new product it's going to require heavy promotion. The future of the product is uncertain so quick decisions may be necessary such as rebranding, revising the design or even withdrawal.
95
Sector 4 of 4 of Boston Matrix Analysis - DOG
Low market growth, low market share: DOG.
Offers very little to the business in terms of sales, cash flow, or future prospects. It may need to be replaced shortly with NPD.
96
Impact of Boston Matrix model
It has relevance when identifying product position and performance and can assist with planning actions to take regarding new and existing products. This could be:
- Building - Supporting question marks.
- Holding - Continue support for stars.
- Milking - Take positive cash flow and reinvest.
- Divesting - Stop production of worst dogs.
97
Limittaions of using Boston Matrix for marketing decisions
- Can't tell a manager what to do next with any product. Detailed and continuous market research will help.
- Only a planning tool and is criticised for simplifying the complex set of factors that determine product success.
- Assumes a higher rate of profitability is directly linked with market share. This is not the case.
98
Pricing decisions: What are the price determinants of pricing decisions for any product?
- Costs of production.
- Competitive conditions in the market.
- Competitors' prices.
- Business and marketing objectives.
- Price elasticity of demand.
- Whether it is a new or an existing product.
99
Define mark-up pricing
Adding a fixed mark-up for profit to the unit cost of buying a product.
100
Define cost-plus pricing
Setting a price by calculating the total unit cost for the product and then adding a fixed profit mark-up.
101
Define contribution-cost pricing
Setting prices based on the variable costs of making a product, in order to make a contribution towards fixed costs and profit.
102
Define competitive pricing
Making pricing decisions based on the price set by competitors.
103
Define price discrimination
Charging different groups of consumers different prices for the same good or service.
104
Define dynamic pricing
Offering products at a price that changes according to the level of demand and the customer's ability to pay.
105
Advantages & Disadvantages of Cost-plus pricing
Advantages:
- The price set covers all costs of production.
- Easy to calc for single-product firms as there is no doubt about fixed costs allocations.
- Suitable for businesses that are price-makers due to market dominance.
Disadvantages:
- Inaccurate for businesses with several products where there is doubt over allocation of fixed costs.
- Does not take market/competitive decisions into account.
- Inflexible.
- If sales fall, average costs rise. Leads to price rising using this method.
106
Advantages & Disadvantages of Contribution Cost Pricing
Advantages:
- All variable costs are covered and a contribution is made to fixed costs.
- Suitable for firms producing several products.
- Flexible; price adapts to suit market conditions/special orders.
Disadvantages:
- Fixed costs not covered.
- Due to flexibility, prices may vary too much, which leaves customers annoyed. Reduced customer loyalty.
107
Advantages & Disadvantages of Competitor Pricing
Advantages:
- Essential for firms with little market power.
- Flexible to reflect market and competitive conditions.
Disadvantages:
- Price set may not cover all costs of production.
- Price may have to vary frequently due to changing market and competitive conditions.
108
Advantages & Disadvantages of Price Discrimination
Advantages:
- Uses price elasticity (the responsiveness of demand to price changes) to charge different prices to increase revenue.
Disadvantages:
- There are administrative costs of having different pricing levels.
- Customers may switch to lower-priced markets.
- Consumers paying higher prices may object and look for other alternatives.
109
Define penetration pricing
Setting a relatively low price to achieve a high volume of sales.
- Used for a mass marketing approach to gain large market share. If large market share is gained, the price can rise. Increase profit margin.
110
Define market skimming
Setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand.
111
Define psychological pricing
Setting a price at a level which matches consumers' views about a product's perceived value.
112
Define promotion
The use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorship, and public relations to inform consumers and persuade them to buy.
113
Define advertising
Paid-for communication to inform and persuade consumers, using media such as TV, newspapers, and cinema.
114
Define direct promotion
A range of promotional activities aimed at the target customers. Also known as direct marketing.
115
Define sales promotion
Incentives such as special offers or special deals directed at consumers or retailers to achieve short-term sales increases and repeat purchases by consumers.
116
Define promotion mix
The combination of promotional techniques that a firm uses to sell a product.
117
What are the different promotional objectives?
- Increasing sales by raising consumer awareness of a product (important for new products).
- Increasing consumer recall of an existing product & its qualities.
- Increasing purchases by existing consumers or attracting new consumers to the brand.
- Demonstrating the superior specification or qualities of a product compared with those of competitors.
- Creating/reinforcing brand image/personality of product.
- Encouraging retailers to hold inventories of the product and actively promote products to the final consumer.
118
2 different forms of advertising?
Informative advertising: Giving information about a product.
Persuasive advertising: adverts trying to create a distinct image or brand identity.
119
What are the different advertising methods?
- Print advertising.
- Broadcast advertising.
- Outdoor advertising.
- Product placement advertising.
- Guerrilla advertising.
- Sponsorship.
- Digital advertising.
120
Sales promotion method: Price offers and its limitations?
Temporary reductions in price (discounts), Its to encourage existing customers to buy more and to attract new customers as product is more competitive.
Limitations:
- Price reductions reduces gross profit for each item sold.
- Negative impact on brand's reputation from discounted price.
121
Sales promotion method: Money-off coupons and its limitations?
A more versatile & better-focused way of offering a price discount.
Limitations:
- Encourages consumers to buy what they would have bought.
- Retailers may be surprised by the increase in demand and not hold enough inventory, leads to consumer disappointment.
- Number of consumers using coupons can be low if discounts are small.
122
Sales promotion method: Customer loyalty schemes like customer loyalty cards and its limitations?
AIM: Encourage repeat purchases & discourage consumers from buying from competitors.
Limitations:
- Discount cuts gross profit on each purchase.
- Administration costs.
- Most consumers have many loyalty cards from different retailers, loyalty impact is reduced.
123
Sales promotion method: Money refunds and its limitations?
Limitations:
- Consumers have to complete and post a form, which may be disincentive.
- The delay before a refund can be disincentive.
124
Sales promotion method: Buy one, get one free and its limitations?
This encourages multiple purchases, reduces demand for competitors' products.
Limitations:
- Substantial reduction in gross profit margin.
- Consumers conclude normal price is too high.
- Impacts reputation.
- Current sales increase, however future sales may fall as consumers stocked up on the product.
125
Sales promotion method: Point of sales display and its limitations?
Maximum impact on consumer behavior is achieved by attractive, informative and well-positioned displays in stores.
Limitations:
- Best display points are offered to market leaders - products with high market share.
- New products may struggle for the best positions in stores unless big discounts are offered to retailers.
126
How to know which advertising method is most suitable to be used?
This will depend upon a number of factors. These being:
Cost
Consumer profile
Message and image to be communicated
Other aspects of the marketing mix
Legal constraints
127
What are the direct promotion methods?
1) Direct mail.
- Sent out by post.
- Low cost.
- More ppl prefer digital communication.
- Junk mail/thrown away.
2) Telemarketing.
- Marketing activities conducted over the telephone.
- Can be outsourced to an agency. They charge for each cold call taken.
- Lower cost than personal selling.
- Many consumers object to cold-calling.
- Easy for consumers to reject a telemarketing message.
3) Personal selling.
A sales person is employed to sell to each individual consumer.
- Sales success rates are often high with skilled direct employees.
- Used for expensive industrial products.
- Effective with expensive/complex products that require specialist knowledge.
- Customers complain of being pressured to buy.
- Sales employees need to be well-trained.
- High-cost method of promotion/selling.
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Define digital promotion
The promotion of products using digital technologies, mainly on the internet but also including mobile cell phones. This is currently the fastest-growing method of promotion which is rapidly changing.
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What are the methods of digital promotion?
- Social media marketing
- Email marketing
- Online advertising
- Smartphone marketing (apps and notifications)
Search engine optimisation
Viral marketing
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Define e-commerce
The buying and selling of goods and services by businesses and consumers through an electronic medium.
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What are the benefits of digital promotion?
- Worldwide coverage - increases potenital market size as websites allows business to trade globally.
- Relatively low cost.
- Easy to track & measure results - using web analytics/techniques of measuring response rates/details of how customers use a website or respond to advertisements available, letting business improve the effectiveness of future campaigns.
- Personalisation - Special offers sent on website.
- Social media communication builds customer loyalty.
- Content marketing - Helps businesses gain social currency if videos/photos go viral.
- Website convenience increases sales.
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What are the limitations of digital promotion?
- Time-consuming - (can be outsourced but is very high cost).. optimising online advertising campaigns/creating marketing content is very time-consuming.
- Skills & training - employees are required to have up-to-date knowledge & expertise to carry out digital marketing w/ success as tools, platforms and trends change rapidly.
- Global competition - Competitors around the world. Is difficult and costly.
- Complaints & feedback - Unhappy customers can send public and negative reviews abt the business and its products. This is visible to the target audience. Important for businesses to respond quickly and handle the criticism.
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What is the role of packaging in promotion?
The quality, design and materials used in packaging play a role in promotion. Packaging can perform the following functions:
- Protect product.
- Give information; contents, ingredients, instructions, etc.
- Support the brand image.
- Make the product attractive.
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What is the role of branding in promotion?
A brand is a name given by a firm to a product or a range of products. The aims of this are to aid customer recognition, make the product distinctive and give the product an identity.
The choice of brand name is an important part of the overall marketing strategy. Many large retailers today have now started to introduce their own branded products to gain full marketing control.
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Benefits of effective branding (name of a firm)?
- Increases chances of brand recall by consumers when several similar products are available.
- Differentiates product from competitors, reinforcing difference by promotion.
- Reduces the responsiveness of consumer demand to a price increase. Consumers often have preferences for well-known brands and are prepared to pay a high price for them. This increases profit margin.
- Increases consumer loyalty to brands.
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Define the channel of distribution
The chain of intermediaries a product passes through from producer to final consumer.
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What is Direct Selling? (Advantages + Disadvantages)
- Direct route from manufacturer to consumer, 0 intermediaries. Direct routes are used when goods are bought infrequently, but in large quantities, bulky & expensive to transport.
ADVANTAGES:
- No markup/profit taken by intermediaries.
- Producer has complete control of marketing mix.
- Quicker.
- Direct contact with customers gives better market research.
DISADVANTAGES:
- Storage and inventory costs have to be paid by the producer.
- No retail outlets for try before you buy, inconvenient to consumers.
- No after-sales service is offered by shops.
- Delivery expenses.
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What is the Single-intermediary channel? (Advantages + Disadvantages)
- Manufacturer to retailer to consumer. These retailers have big purchasing power, able to arrange own systems for storage.
ADVANTAGES:
- Retailers cover storage costs.
- Retailer displays products and deals with after-sales service.
- Retailers are located conveniently for customers.
- Specialisation.
DISADVANTAGES:
- Intermediary takes a profit mark-up, making the product more expensive to consumers.
- Producer loses control of marketing mix.
- The outlet is not exclusive, as the retailer sells competitors' products too.
- Retailers pass delivery costs onto customers.
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What is the Double-intermediary channel? (Advanatges + Disadvantages)
- Manufacturer to wholesaler to retailer to consumer.
ADVANTAGES:
- Wholesalers buy in bulk and store goods by producers.
- Reduces producers' inventory costs.
- Wholesalers pay transport costs to retailers.
- Convenience for retailers, as wholesalers buy in large quantities and sell in small quantities.
DISADVANTAGES:
- More profit-taking by intermediaries, making product more expensive to consumers.
- Producers lose further control over the marketing mix.
- Slows down the distribution chain.
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Define online marketing (e-commerce)
Selling and marketing activities that use the internet, email, and mobile communications to encourage direct sales via electronic commerce.
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What are the benefits of e-commerce?
- Relatively inexpensive.
- Worldwide audience.
- Consumers interact with the websites and make purchases and leave important data abt themselves, a good tool for market research.
- Convenient to customers.
- Accessbility to internet increasing globally.
- Selling products on the internet involves lower fixed costs than traditional retail stores.
- Dynamic pricing - charging different prices to different consumers - is easier.
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What are the limitations of e-commerce?
- Low-speed internet connection in some countries.
- Consumers can't try, see, touch, or feel the products which may reduce willingness to buy.
- Potential increase in returns if consumers are dissatisfied with purchase once received.
- Cost and unreliability of postal services in some countries.
- Websites must be kept up to date & user-friendly, and good websites can be expensive to develop.
- Worries about internet security may reduce future growth potential.
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What are the factors influencing the choice of distribution channel?
- Complexity and size of the product.
- How geographically dispersed the market is.
- Target market location.
- Will online marketing be used?
- Marketing mix control.
- Will integrate with other elements of the marketing mix.
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Why is the choice of distribution channel important?
- Consumers can benefit from easy access to the product. This allows them to see and try the product before they buy. It is more convenient for them this way.
- Manufacturers need outlets that have a wide geographical market coverage. They also want the desired image of the product to be promoted effectively.
- Retailers who sell the goods to the final consumer add a mark-up to cover their costs and make profit. If price is very important to the consumer, it is more effective to have no intermediaries which is an advantage to the manufacturer as it gives them more control over the marketing mix and they can charge a lower price.
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Define digital distribution
The delivery or distribution of digital media content such as audio, video, TV programmes, films, software, and video games.
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Define physical distribution
The activities that combine to achieve the efficient movement of finished products from the end of the production operation to the consumer.
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Define integrated marketing mix
The key marketing decisions complement each other and work together to give customers a consistent message about the product.
