AQA GCSE Business Unit 5 - Marketing

The marketing mix

• all the activities influencing whether a consumer buys a product or not

• Price

• Product

• Place

• Promotion

Market Research

The process of Gathering analysing and processing data relevant to marketing descisions

Purpose of market research

Market research reduces the risks faced by a business and allows it to better understand the market and its conditions

• MR will gather info about

  • demand

  • market share

  • competition

  • target market

Types of data in market research

• Quantitative Market Research

  • research designed to discover numerical information related to a market

• Qualitative Market Research

  • Research that uncovers the reasons behind buying descisions of people

Evaluation of Primary and Secondary Market Research

• Primary

  • +can be tailored to meet the business’ needs

  • + up to date

  • - can be expensive

• Secondary

  • + can be gathered quickly

  • + can provide information on large sections of the population

  • - existing data may be old

Methods of Primary Market Research

• Telephone Survey

  • can call when convenient but people may be reluctant to give answers

• Door to Door

  • can see reactions but is time consuming

• Focus Groups

  • in dept responses but low populational validity

• Internet research

  • Cheap but can only research online customers

Market Growth

Change in Market size / Original market size * 100

Product

• Physical item or service

• do what theyre designed to do

• should be good value for money

Product lifecycle

The way the sales of a product change throught its life

Stages of the Product life cycle

• Development - the product is still being created/developed

• Growth - The product has been released and the sales are increasing

• Maturity - Rate of growth of sales decreases

• Saturation - the product is no longer growing

• Decline - The sales of the product begins to rapidly decline

Extension strategies

• Strategies used to stop sales declining

  • Price - decrease price or offer discount

  • Product - make new edition of prodcuct or change design

  • Place - Have the product sold in more location

  • Promotion - Advertise the product more

Market Share

The proportion of the total sales of a market that can be attributed to one business/product

Sales of the product/Total Market Sales *100

The Boston Matrix

• Star

  • High Market Growth Rate + High Market Share

• (Cash) Cow

  • Low Market Growth Rate + High Market Share

• Dog

  • Low Market Growth Rate + Low Market Share

• Question Mark

  • High Market Growth Rate + Low Market Share

Stars in the Boston Matrix

• High Market Growth Rate + High Market Share

• growing revenue but growing competition

• high promotion costs

• Outflows may initially exceed inflows

  • however when break even is reached enough profit is produced to support other products

Cows in the Boston Matrix

• Low Market Growth Rate + High Market Share

• establihed markets

• lower promotion costs

• less competition

• products can be ‘milked

Dogs in the Boston Matrix

• Low Market Growth Rate + Low Market Share

• Likely to be withdrawn if the busness faces financial difficulty

Question marks in the Boston Matrix

• High Market Growth Rate + Low Market Share

• potential to becme stars of Cash Cows

• require high levels of investment

• potential for sales increases as market grows

Product development

• most large businesses have a wide range of products at different stages of the life-cycle giving them a balanced portfolio

• businesses may develop new products in order to expand their portfolios and increase sales

Benefits and risks of developing new producys

• + new products may extend the life cycle of existing products

• + busimesses can initially charge higher prices before there are competitors

• - developing a new product is costly and time consuming

• - businesses can end up wasting resources if they develop something customers dont want

Factors affecting rpice of a product

• Unit Costs

• Demand

• Competition

• Stage in Life Cycle

• Branding

• Marketing mix

Price Skimming

• Setting a high price for a product

  • Short term - expensive when it first enters

  • Long term - when a firm wants to create an illusion of quality

Penetration Pricing

• setting a low price for a product in order to penetrate the market

  • gains market share

  • works with price sensetive customers

  • price increased once product is established

Competitive Pricing

• matching the price that competitiors charge

Loss leader

• product sold at a loss in hope the customer will buy other items from the business where they will make a profit

Cost+

• products are priced by covering the cost of it and adding a percentage markup

Segmentation

When a market is divided into different groups of wants and needs. Each of these needs and wants are segements within the market.

• Ways of segmenting the market include

  • Gender

  • age

  • location

  • income

  • stage of life

Benefits of segmentation

Segmentation allows a business to decide which segment it wants to target, allowing it to use its marketing more effectively

Promotion

• Promotion is when firms advertise a product to make customers want to buy it

• promotion is important because it informs and persuades customers to buy a product, leading to a potential increase in sales

Methods of Promotion

• Newspapers (local/national)

• posters/billboards

• leaflets

• magazines

• tv adverts

• Social Media

• PR

Place

• Place is about distribution

• products can either be distributed directly to a consumer, or through a wholesaler or retailer first

• Zero level distribution has no intermediaries

• One level distribution has one intermediary

• and Two level dustribution has two intermediaries