Studied by 18 people
CHAPTER 1 - Introduction to marketing
Marketing
The management task that links the business to the customer by identifying and meeting the needs of customers profitably - it does this by getting the right product at the right price to the right place at the right time.
What does marketing include
Market research
Product design
Pricing
Advertising
Distribution
Customer service
Packaging
Market orientated
An outward-looking approach basing product decisions on consumer demand, as established by market research.
When a business conducts market research to find out consumer wants before developing a product. - It is less risky.
Product orientated
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.
A business who’s main focus of activity is on the products itself - doesn’t conduct market research.
Develops a product in the hope they will find consumers who purchase it.
Advantages of market orientated
Less likely for newly developed product failing
It can be worth it if cost of developing product was expensive e.g. car
Likely to survive longer
Make higher profits —> more sales
Constant feedback from consumers allows product to be adapted to changing consumer tastes
Disadvantages market orientation
Offering choice and range is expensive
Business might overstretch its resources if they adapt to all changing fashions - expensive
Market share
The percentage of sales in the total market sold by one business.
It can be a measure of a business’s performance compared to its competitors.
Equation for market share
Market share % = (Sales of business in time period / total market sales in time period) x 100
Market leadership
When a business has the highest market share of all firms that operate in that market.
Advantages of being ‘market leader’
It can be used in advertising and promotion as a convincing argument to attract customers
Suppliers - Might offer special discounts on supplies as they want to have a long-term supply contract
Retailers - Keen to stock
Recruitment of high class employees
Financing might become easier
Disadvantages of being ‘market leader’
Pressure on business and key employees to continue like that
Financially unsustainable in the long-term if using ‘sell-it-cheap-to-increase-share’
Government regulations
Prevent monopolies
Higher prices to consumers as a result of low competition
Market size
The total level of sales of all producers within a market.
Measured in
Volume of sales (units sold)
Value of goods sold (revenue)
Market growth
The percentage change in the total size of a market (volume or value) over a period of time;
Volume = units sold
Value = Revenue made
Equation for market growth
Equation for annual market growth: (Total market sales this year - Total market sales last year) / Total market sales last year * 100
Reasons why markets grow
Technological advancements
Increasing customer incomes - greater disposable incomes
International trade agreements
Lower trade barriers
Legal changes
Changes in consumer tastes
CHAPTER 23 - Marketing planning
Unique Selling Point (USP)
The special feature of a product or customer service that makes it different from those of competitors.
Target Market
The segment of the market that a particular product is aimed at.
Market segment
A sub-group of a market made up of consumers with similar characteristics, tastes and preferences.
Marketing planning
The process of developing appropriate strategies and preparing marketing activities to meet marketing objectives.
Based on market trends, competitors’ actions, consumer wants.
Market research is vital
What are the main elements of a marketing plan?
Details of the company’s SMART marketing objectives
Sales forecasts to allow the progress of the plan to be monitored
Marketing budget - how much finance the business plans to spend and how it is allocated.
Marketing strategies - adopted to achieve marketing objectives.
Detailed action plans
Market segmentation
Identifying different segments within a market and targeting different products or services to them.
Marketing mix
The key decisions that must be taken in the effective marketing of a product.
Consumer profile
The main characteristics of consumers in target market. - It helps in marketing decision.
A quantified picture of consumers of a firm’s products, showing proportions of age groups, income levels, location, gender and social class.
How do businesses segment markets?
Geographic
Based on location
E.g. clothes depend on weather
Demographic
age, sex, family size, ethnic background
Psychographic
Lifestyle, personalities, values, hobbies, attitudes
Production positioning
The process of designing the company’s products and image to occupy a distinctive place in the perceptions of consumers in the target market.
Product position map or perception map
A diagram that analyses consumer perceptions of completing brands in respect of two product characteristics.
What are the uses of product-positioning analysis
Identifies potential gaps in the market
Busines could position the new product with others - less risky but also less profitable
Marketing manager is aware of key features of the product that should be promoted most heavily.
Niche marketing
Identifying and exploiting a small segment of a larger market by developing products to suit it.
Niche market
A small and specific part of a larger market.
Mass marketing
Selling the same products to the whole market with no attempt to target groups within it.
Mass market
A market for products that are often standarised and sold in large quantities.
Boston Consulting Group (BCG) Matrix
A method of analysing the product portfolio of a business in terms of market share and market growth.
The size of each circle on the matrix represents the total revenue earnt by each product.
Competitive advantage
An advantage that a business has over rivals gained by offering consumers greater value, either with low prices or by providing greater benefits and service to justify a higher price.
CHAPTER 24 - Sales forecasting
Sales forecast
Prediction of sales for the next time period.
Benefits of sales forecasting
Reduces risk
Operations department - knows how many units to produce + how much inventory to hold
Marketing department - see if changes need to be made to exisiting marketing mix
HRM - workforce plan of how many employees are needed
Finance department - plan cash flows with greater accuracy
Limitations of sales forecasting
Precision is difficult
Can be inaccurate
Unforseen external factors
New laws
Pressure group activity
General economic climate
Suppliers might increase selling prices
CHAPTER 25 - Market research
Market research
Process of collecting, recording and analysing data about customers, competitors and the market.
Why do organisations carry out market research?
Find out whether a consumer will buy a particular product
The reaction of consumers to:
Different price levels
Alternative forms of promotion
New types of packaging
Different methods of distribution
Why do organisations carry out market research?
To identify the main features of a market and reduce risks of market entry
Key features:
Overall size - is it worth entering the market?
Growth - is the market becomin bigger or smaller?
Competitors - is it easy for new rivals to enter market?
Assess the likely chances of that product achieveing a profitable level of sales?
Predict future demand changes and market trends
Use research to try to establish future demand trends
Explain consumer buying patterns for existing prdoucts and market trends
Also conducted for existing products and brands
Assess current performance
Helps future marketing objectives
Find out reasons behind consumer decisions to purchase or not.
Assess the most favoured designs, flavours, styles, promotions and packaging
Find out what consumers like and dislike
Types of market research
Primary
Secondary
Primary market research + (Adv + Dis.)
The collection of first-hand data that is directly related to a firm’s needs.
Data which is collected by the business itself for its own needs.
Advantages:
Up to date - more useful that secondary data
Relevant - directly addresses questions of the business
Confidential - Competitors don’t have access to it
Increasing use of IT - is reducing its cost
Disadvantages:
Costly - need to hire agencies
Time-consuming - obtained from the internet more quickly
Doubts over accuracy and validity - risk of sampling error
Secondary market research + (Adv + Dis.)
Collection of data from second-hand sources.
Data which has already been collected by an outside source e.g. competitors.
Advantages:
Cheap
Good to get a general idea of the market before primary research
Quick
Allows comparison of data from different sources
Disadvantages:
Out of date - not updated frequently
Not entirely suitable for needs of business
Accuracy of source needs to be checked as accuracy might be unknown
Primary research methods
Surveys / questionnaires
Interviews
Focus groups
Observations
Survey
Detailed study of a market or geographical area to gather data on attitudes, impressions, opinions and satisfaction levels of products or businesses, by asking a section of the population.
You can obtain both qualitative and quantitative data
Things to consider when conducting consumer surveys
Who to ask - impossible + expensive to ask all potential customers. - Sampling is needes
What to ask - Has to be unbiased + unambiguous
How to ask - face-to-face, telephone, social media, online survey
How accurate it is
Open questions
Those that invite a wide-ranging or imaginative response.
Closed questions
Questions to which a limited number of present answers is offered.
Interviews (adv. + dis.)
Advantages
Qualitative data
Follow-up questions can be asked
Disadvantages
Questions can be misunderstood
Expensive
Time consuming
Biased
Focus groups
When a group is asked questions about the product and they actively take part in a conversation between them.
A group of people who are asked about their attitude towards a product, service, advertisement or new style of packaging.
Observational technique
A qualitative method of collecting and analysing information obtained through directly or indirectly watching and observing others in business environments, e.g., watching consumers walk around a supermarket.
Problem - How ethical is it?
Methods of secondary research
Market intelligence analysing reports
Academic journals
Government puublications
Trade organisations
Media articles and specialist publications
Online
Qualitative research
Research into the in-depth motivations behind consumer buying behaviour or opinions.
Quality rather than quantity.
Motivational factors behind consumer buying habits.
Quantitative research
Research that leads to numerical results that can be presented and analysed.
Quantity rather than quality
To find out the quantities that consumers might purchase and at what prices.
Sample
A group of people taking part in a market research survey selected to be representative of the whole target market.
Methods of sampling
Quota sampling
Random sampling
Convenience sampling
Sampling error
Mistakes in market research caused by using a sample for data collection rather than the whole target population.
Quota sampling
Gathering data from a number of people chosen out of a specific sub-group.
Selection is non-scientific - can be biased
Interviewer chooses the people out of the market
Not everyone gets a chance of selection
Random sampling
Every member of the target population has an equal chance of being selected.
List of all the people in the target population
Each person is given a numerical value
Chosen at random
Convenience sampling
Drawing a representative selection of people because of the ease of volunteering or selecting people because of their availability or easy access.
Likely to be biased
E.g. ask people in the street
CHAPTER 26 - The seven Ps of the marketing mix
Digital promotion
The use of the internet, mobile devices, social media, search engines and other channels to communicate with consumers to provide information about products and encourage the purchase of them.
Marketing mix
The key decisions that must be taken in the effective marketing of a product
Coordinated marketing mix
Key marketing decisions complement each other and work together to give customers a consistent message about the product.
The 7P’s
(for all products - goods + services)
Product
Price
Place
Promotion
(for services
People
Process
Physical evidence
Product
The end result of the production sold on the market to satisfy a customer need.
Consumer durables
Manufactured products that can be reused and are expected to have a reasonably long life, such as cars.
Product life cycle
The pattern of sales recorded of a product from launch to withdrawl from market.
Stages of product life cycle
Introduction - sales usually low, increase slowly
Growth - Sales increase quickly
Maturity / saturation - Sales slow down - most consumers already have the product.
Decline - sales decrease largely
Product portfolio
The collection of all the products (goods and services) offered for sale by a business.
Reduces the risk
Diversification
Balanced product portfolio
When one product is in the decline stage and another is in the growth stage or ready for introduction.
Extension strategies
Marketing plance that extend the maturity stage of the product life cycle.
Extension strategies
Add features
Repackage
Discount
Rebrand
Sell to new markets
Note
Flashcard