Marketing management

Define sales volume and sales value

• They are marketing objectives

• Sales volume measures the TQ over a time, suggesting it’s easy to visualise but doesn’t identify the value from each sale

• Sales value measures the TR over a time, suggesting it identifies the value from each sale, making it a clearer measure than sales volume

Define sales growth

A marketing objective which measures the growth/increase in sales volume/value over a time

Define market share

• A marketing objective which measures the percentage of sales in a market by one firm/brand

• Furthermore, firms can measure how well it’s doing compared to its rivals

• Consequently, firms can increase market share by increasing their customer base

Define market size and market growth

• They are marketing objectives

• Market size measures the total sales volume/value in a market over a time

• Market growth measures the increase in market size from one period to another

• Furthermore, firms can increase their sales if their market share stays the same/increases due to the increasing market size, suggesting there are more customers in the market 

Define brand loyalty

A qualitative marketing objective which measures how loyal customers are to a firm, suggesting increased brand loyalty decreases competitiveness due to customers being less willing to switch to substitutes 

Analyse the three main reasons why market research is done

1. Helps businesses spot opportunities because they can research customer buying patterns, allowing them to spot growing/declining markets

2. Helps businesses decide what to do next because they can use the reseach before launching a new product/advertising campaign

3. Helps businesses evaluate their strategies because they can use the sales figures to identify if their plans are working

Define random sampling

When names are selected randomly from a list

Define stratified sampling

When the population is divided into groups and people are selected randomly from each group, where the number of people selected from each group is proportional to the group size

Define quota sampling

When people who fit a category (e.g. mothers between ages 30-40) to get opinions from the people the product is directly targeted at

Define segmenting

• Dividing the market into groups with similar characteristics/needs

• For example, factors can include:

• Demographic (e.g. age, gender, socio-economic class)

• Geographic (e.g. country)

• Income (e.g. high income)

• Behaviour (e.g. lifestyle)

Define targeting

• Deciding which market segment to focus on and adapt the product and marketing mix to appeal to this group

• For example, markets can include:

• Niche/differentiated markets (e.g. a small business selling microwave meals could establish a niche by specialising in people with nut allergies)

• Mass/undifferentiated markets (e.g. Coca-Cola appeals to many customers)

Define positioning

• Position the product in the target customers’ minds so they see it as better than the competition

• A market map shows extremes for two measures (e.g. low price vs high price & low quality vs high quality)

Analyse the factors that affect the marketing mix

• Competitiors that offer substitutes to a product will directly affect the price

• The target market segment (e.g. low-income consumers that may be more price sensitive will affect the price)

• The location of a business (e.g. a business based in Alaska won’t be able to include next-day delivery to the rest of the world as part of its process)

Analyse the product mix

• A product line consists of related products (including different sizes of the same product) with similar characteristics, uses or target customers

• A Boston Matrix is a valuable way of showing where a business’ products are positioned in the market

Define the Boston Matrix

Compares market growth with market share, where the size of each circle represents the sales revenue of each product

Define the question mark on the Boston Matrix

• Low market share & high market growth

• All new products are question marks & aren’t profitable yet (they could succeed/fail) so they need heavy advertising

• A firm can do brand building harvesting (maximising short run sales/profits) or divestment (selling off the product)

Define the star on the Boston Matrix

• High market share & high market growth

• They’re in the growth phase & have the most potential

• They’re future cash cows

• However, rivals may try to steal its market growth so a firm must spend a lot on promotion to maintain their market share & also to increase capacity to keep up with demand

Define the cash cow on the Boston Matrix

• High market share & low market growth

• They’re in the maturity so they’ve already been promoted and they’re produced in high volumes, minimising costs

• They generate a lot of money

Define the dog on the Boston Matrix

• Low market share & market growth

• They’re usually a lost cause so if they’re still profitable, the firm will havest profit in the short run (divestment)

Analyse why it’s worthwhile for companies to develop new products

1. New products can bring in new customers

2. They give a competitive advantage

3. They allow companies to maintain a balanced product portfolio, increasing risk-bearing economies of scale

Define the product life cycle

• Shows the sales of a product overtime

• It’s valuable for planning marketing strategies & changing the marketing mix

• Marketing decisions will be based on where a product is in its life cycle

Define the development stage on the product life cycle

• R&D department develop the product & the marketing department does market research

• High costs; there aren’t any sales yet to cover the costs

• Has a high failure rate; there’s often not enough demand or the firm can’t make the product cheaply enough to profit

Define the introduction stage on the product life cycle

• The product is launched, either in one market or several markets & it’s sometimes launched with complementary products (e.g. the PlayStation was launched with games)

• The firm promotes the product heavily to build sales but they need to make sure they’ve got enough resources & capacity to meet the demand the promotions creat

• The intial price may be high to cover promotional costs (price skimming) or prices cans tart low to encourage sales (penetration pricing)

• Sales rise but the sales revenue must pay for the high fixed cost of development before profit so the product iss ditched if its sales are poor

Define the growth stage on the product life cycle

• Sales grow fast; there are new customers & repeat customers

• Competitiors may be attracted to the market so the promotion should show differences from rivals

• The product is often improved/developed & it may be targeted at a different market segment

• Rising sales encourage more outlets (e.g. retailers) to stock the product, increasing the distribution range

Define the maturity stage on the product life cycle

• Sales reach a peak & profitability; fixed costs of development have been paid paid for

• At saturation (when the market is full & has reached maximum growth) sales may start to fall, depending on the product; sales are more likely to fall for long-lasting products that customers do not need to replace regularly

• Lack of new customers suggest competition within the industry becomes fierce so sales may fall

Define the decline stage on the product life cycle

• Sales & profits fall rapidly; the product doesn’t appeal to customers any more

• However, if promotional costs are reduced enough, the product may stay profitable

• If sales carry on falling, the product is withdrawn/sold to another firm (divestment) & sales may pick up again if rivals leave the market first

• Decline isn’t inevitable; as long as the product doesn’t go obsolete, consumer tastes change or poor marketing, quality products with excellent original design can carry on selling for decades

Define extension strategies

• They try to prolong the life of the product by changing the marketing mix

• Product development: Firms improve /redesign a product

• Market development: Firms can find newmarkets/uses for existing products

• A firm can change the way it’s distributed, price, promotion

Analyse the value of the product life cycle when changing the marketing mix

• When the product is in development, the focus should be on product & price; marketing can do research into what product people want and how much they are willing to pay for it & in the final stages, they may focus on how they are going to promote it and where they’ll sell it

• As the product is first introduced, marketing usually focuses on place & promotion to get the product out and raise awareness & depending on hwo well the product is received, the price might be adjusted

• As the product enters growth, may focus on people, physical environment & process

• During maturity, may focus on price & promotion

• During decline, discounted prices & stop training people