Flashcards in Unit 3 (unfinished) Deck (19):
What is Marketing?
Marketing finds out what customers need and want. Marketing also tries to anticipate what they'll want to the future so that the business can get one step ahead of the market.
What are marketing objectives?
Marketing objectives are targets that a company's marketing department sets itself.
Sales Volume and Sales value: An objective might be to reach a certain sales volume (number of units sold) over a certain period of time.
Sales growth: A business might aim for a growth of a certain volume or a certain value over a year
Market Share: A common marketing objective for a business is to increase their market share by a certain amount.
Market Size and Market Growth: The market size is the total number of sales (or total values of sales revenue) in the market over a period of time. If the market size increases from on period of time to another is growing.
Brand loyalty: A business might try yo improve its brand loyalty.
What are the internal factors affecting marketing objectives?
Corporate objectives - the ,marketing department has to make sure its objectives are aligned with the company's overall goals.
Finance - The finance department allocates the marketing department's budget. This affects what the marketing department is able to do.
Human Resources - HR planning identifies how many staff the company needs. If the business has decided to reduce/increase staffing levels.
What are the external factors affecting marketing objectives?
Market - The state of the economy has a big impact on marketing objectives. An economic boom is a good time to increase sales volume. In a recession, the marketing department is more likely to set an objective of maintaining market share.
Technology - In markets where technology changes rapidly, marketing objectives tend to be focused on sales and price because new technology causes prices to fall or rise very fast.
Competitors - The actions of competitors affect marketing objectives, particularly in a highly competitive market. If a competitor decreases prices then other competitors may also decrease prices.
Why do businesses need to understand their market?
Before a company can try to sell their product, they need to understand the market they are operating in. They need to work to out if they are working in a local, national or international market.
Why is market research done?
Market research helps businesses spot opportunities, it shows customer buying patters to aid them in predicting what people will be buying in the future. Also to show businesses any growing markets.
It helps decide what to do next, businesses can do some market research before launching a product.
It helps them see if their plans are working. A business that keeps a keen eye on sales figure will notice if their marketing strategy is having the right effect.
What is Quantitative market research?
Quantitative research produces numerical statistics - facts and figures. It often uses multiple choices.
What is Qualitative market research?
Qualitative research looks into the feelings and motivations of consumers. It uses focus groups that have an in depth discussions on a product.
What is primary market research?
Primary data is gathered with things like questionnaires, interviews and focus groups. Businesses can do test marketing.
Primary research uses sampling to make predictions about the whole market based on a sample. Primary data is needed to find out what consumers think of a new product or advert.
Primary data is specific to the purpose it is needed for. This is good for niche markets. Primary data is exclusive to the business.
However it is labour extensive, expensive and slow.
What is secondary research?
Internal sources of secondary data include from loyalty cards, feedback from company salesman and analysis of company sales reports.
External sources include government publications like the social trends report.
Secondary data is much easier, faster and cheaper to get hold of than primary data. However secondary data that was gathered for a different purpose might be unsuitable and may contain errors and may be out of date.
What are the 3 main types of sample?
Simple random sample - Names are picked randomly from a lost from the electoral register.
Stratified Sample - The population is divided into groups and people are selected randomly from each group. The number of people picked from each group is proportional to the size of the group.
Quota sample - People are picked who fit into a category. Businesses use quota sampling to get opinion from the people the product is directly targeted at.
Why does market research need to avoid bias?
Researchers have to be careful to avoid any possible bias.
Questionnaires and interviews would avoid leading questions which are questions that are leading the respondent in a particular way.
The more representative a sample is, the more confidence a business can have in the results of the research.
What is time series analysis?
Time series analysis is used to reveal underlying patterns by recording and plotting data over time.
Trends are the long term movement of a variable.
Seasonal fluctuations repeat on a regular basis whereas random fluctuations have no patterns to them.
Time series analysis can also be used to look for links between sales and marketing activity.
What is extrapolation?
Trends in sales data from previous years can be continued into the future (extrapolated) to forecast future sales. This allows managers to set sales targets. Sales performance can be measured against these targets.
Extrapolation is most useful in fairly stable markets. Extrapolation relies on past trends remaining true. Unfortunately, the pace of change in the market can be very fast so extrapolations from the past dont always predict the future very accurately.
What is correlation?
Correlation is a measure of how closely two variables are related. Correlation may be positive or negative, strong or weak.
It is a useful tool, but correlation doesn't prove cause or effect. Other variables may be important.
External factors have to be taken into account when reviewing correlation.
How can sales forecasts help other departments?
Sales forecast allow the finance department to produce cash flow forecasts and can be used to predict sales to work out how much money is expected to come in.
Sales forecasts also allow production and human resources departments to prepare for the expected level of sales. They can make sure that they have the right amount of machinery, stock and staff.
What is price elasticity of demand?
The price elasticity of a product is how much the price change affects the demand.
Price elasticity of demand is always negative (a positive change in price causes a negative change in demand, and a negative change in price causes a positive change in demand) so you can just ignore the minus sign.
If the price elasticity of demand is greater than 1 then the product is price elastic. If the price elasticity of demand is less than 1 it is price inelastic.
How does elasticity help make business make choices?
Price elasticity helps a manufacturer decide whether to raise or lower the price of a product. They can see what happens to the sales, and ultimately what will happen to sales revenue.
Income elasticity helps a manufacturer see what will happen to sales if the economy grows or shrinks.