Unit 3- Marketing management

What are the 5 marketing objectives?

• sales volume and sales value

• market size

• market and sales growth

• market share

• band loyalty

What is the value of setting marketing objectives?

• they help ensure the department stays on track with the business's overall aims

• they provide focus and direction for the marketing activities and strategy of the business

• they help ensure that the resources of the marketing department are used effectively

• they motivate and align employees within the marketing department

What is meant by the marketing objective “sales volume and sales value”?

• Sales volume is the amount of sales expressed as a number of units sold

• Sales value is the amount of sales expressed as the total sum of money spent by consumers

What is meant by the marketing objective “market size”?

• Market size is the total sales value or sales volume in a given market (isn't usually a marketing objective)

How do you calculate market size?

number of units sold x price

What i meant by the marketing objective of “market and sales growth”?

• Market and sales growth is the percentage increase in the size of the market by value or volume over a period of time

How can market and sales growth be calculated?

change in size of market/ original size x 100

What is meant by the marketing objective “Market share”?

• Market share is the proportion of total market sales that a firm has.

How do you calculate market share?

business's sales/market sales x 100

What is meant by the marketing objective “Brand loyalty”?

• Brand loyalty exists when a customer keeps returning to buy from a recognised brand

What is branding?

Branding is a promotional method that involves the creation of an identity for a business that distinguishes it and its products from competitors.

What are the 6 external influences which affect marketing objectives?

• economic

• social change/ethics

• technological

• political and legal

• suppliers

• competition

What is market research?

Market research is a collection and analysis of data and information to inform a business about it’s market.

What is primary research?

Primary research involves the collection of first hand data that didn't exist before and therefore is original data

What is secondary research?

Secondary research is research that has already been undertaken by another organisation and therefore already exists

What is quantitative data?

Data based on numbers and figures

What is a positive and negative of quantitative research?

• Easier to analyse

• However doesn't provide in depth information (no reasons why)

What is qualitative data?

Data based on opinions, attitudes, beliefs and intentions

What is a positive and negative of qualitative data?

• Provides more in depth information than quantitative

• However it is more difficult to analyse

What are some examples of primary research?

• Postal/online surveys

• Focus groups

• Interviews

• Observation

• Experiments

What is a focus group?

A small group of people in the business that are asked questions on a specific product, idea,ect.

What are the benefits of primary research?

• Designed specifically to meet the business’ needs

• Up to date and relevant

• Kept private to the business

• More detailed insights

What are the drawbacks of primary research?

• Expensive to obtain

• Time consuming

• Risk of bias

• May not be representative of the wider market

What are some examples of secondary data?

• Google

• Goverment departments

• Trade associations

• Market research reports

• Press and magazines

• Competitior websites

What are the benefits of secondary research?

• Often free

• Already been analysed

• Quick to access and use

What are the drawbacks of secondary research?

• Quickly become out of date

• Not tailored specifically to business’ need

• Specialist reports often quite expensive

What is sampling?

Sampling involves the gathering of data from a sample of respondents, the results of which should be representative of the population.

What is the value of sampling?

Businesses can't ask for the opinions of all potential customers and therefore try to choose a representative sample.

What does the value of sampling will depend upon?

• The sampling technique used

• How the sample was carried out

• The size of the sample

What does the size of a sample depend on?

• The budget available

• The importance of accuracy

• Degree of confidence in results

What is meant by random sampling?

Every member of a population ha an equal chance of being selected an doesn't target any specific segments of the market.

What is the advantages and disadvantages of random sampling?

• quick and easy to select respondents

• less chance of bias

• However may not represent the target market

What is stratified sampling?

The resercher divides or “stratifies” the target group into sections, each representing a key group (or characteristic) that should be present in the final sample.

What are the advantages and disadvantages of stratified sample?

• proportionally representative of the market

• takes more time and resources to plan than other sampling methods

What is meant by quota sampling?

Respondents are selected based on specific characteristics such as age and income.

What is the advantages and disadvantages of quota?

• More likely to be representative of the whole market

• It isn't random so introduces a risk of bias

What are the key influences on the sampling methods?

• Time

• Costs

• The attitudes of different market segment/sections

• Whether business is targeting a specific group of customers

• The firm's understanding of its customer base

Why is it important to interpretate data?

• Inform decision making

• Devising strategy

• Understanding the market

• Identify sales patterns

• Realistic target setting

• Keeping up to date with market changes

• Review of competitors' actions

• Evaluation of past actions

What is correlation?

Correlation looks at the strength of a relationship between 2 variables.

What is positive correlation?

A positive relationship exists is when as the independent variable increases in vaue so does the dependent variable.

What is negative correlation?

A negative relationship exists when as the independent variable increases in value, the dependent value falls in value.

What is no correlation?

There is no correlation when their is no relationship between the independent and dependent variable.

What is meant by strong correlation?

Strong correlation means that there is little room between the data points and the line of best fit.

What is meant by weak correlation?

Weak correlation means that the data points are spread quite wide and far away from the line of best fit.

Is weak correlation positive or negative as a number?

negative.

Is positive correlation expressed as a positive or negative number?

Positive

What is a confidence interval?

A confidence interval gives the percentage probability that a sample range accurately represents the entire population.

What are confidence levels?

Confidence levels reflect the degree of certainty with which a business believes a stated outcome would happen.

Why are confidence intervals important to a business?

Confidence intervals helps the business evaluate the reliability of their sampling and help them decide whether to act on them

What is meant by extrapolation?

Extrapolation uses trends established from historical data to forecast the future.

What are the advantages of extrapolation?

• A simple method of forecasting

• Not much data required

• Quick and cheap

What are the disadvantages of extrapolation?

• Unreliable if there are sgnificant fluctuations in historical data

• Assumes past trends will continue

• Ignores qualitative factors (e.g. changes in tastes & fashion)

What is meant by price elasticity of demand (PED)?

Price elasticity of demand measures the extent to which the quantity of a product demanded is affected in proportion to a change in its price

What does price inelastic mean and what is the value?

Price inelastic means that the change in demand is less than the change in demand. (a value less than 0 ignoring the minus sign)

What does price elastic mean and what is the value?

Price elastic means the change in demand is more than the change in price (a value more than one ignoring the minus sign)

What is meant by unitary price elasticity and what is the value?

Unitary price elasticity is where the change in demand is equal to the change in price(exactly 1 ignoring the minus sign)

What is the formula for calculating PED (price elasticity of demand)?

% change in quantity demanded/% change in price

Factors affecting PED

• Brand strength

• The neccessity of the product

• Is the product one that is bought out of habit?

• Availability of substitutes

• Competitiors

• Amount of income spent on the product

• Time- period (long term price changes tend to have less of an impact)

What are the problems when forecasting price elasticity of demand?

• It is constantly changing in the dynamic world

• Difficulty of finding accurate information

• Competitors don't stand still

• Price elasticity will change over the period of the economic cycle

• Tates/fashion is constantly changing

What is income elasticity of demand (YED)?

Income elasticity of demand measures the extent to which the quantity of a product demanded is affected by a change in income.

What is the formula for calculating YED?

% change in quantity demanded/ % change in income

What does the value of YED mean?

If YED is positive then the product is normal (luxury/neccessity) if YED is negative then the product is an inferior good (savers products).

What does it mean if in YED, the product is a normal product?

This means that if there is a rise in incomes then the product will see an increase in demand and vice versa.

What does it mean in YED, if the product is an inferior good?

This means that if there is a rise in income then the prouct will see a decrease in demand as consumers switch to better alternatives.

In YED what does it mean if the value is more than 1?

This means that the prodcuct is a luxury.

In YED what does it mean if the value is less than 1 but more than 0?

The product is a neccessity

What is the value of using the concepts of PED and YED to marketing decision makers?

• elasticities provide useful insights for management in decision making

• Allows the business to build strong brands and products with USPs to make a product more price inelastic

What is the use of data in marketing decision making and planning?

• the data is analysed using a variety of tools and used to make forecasts and reasonable assumptions which can support decision making

• Marketing data can be used to help predict PED/YED as well as better understand customer needs and forecast sales

What is the process of market segmentation, targetting and positioning?

It is choosing which customers to serve and deciding how to seve them.

What does market segmentation, targeting and positioning closely link with?

• competitiveness

• market research

• niche vs mass markets

• risk & reward

• marketing mix

• adding value

What is market segmentation?

Market segmentation is dividing up the market into sections, known as segments.

What is market targeting?

Deciding which segments of the market to enter

What is market positioning?

Market positioning is how customers percieve the product and what makes it different from the competition.

What are the 4 methods of market segmentation?

• demographic

• geographic

• income

• behavioural

What is meant by the segmentation method “demographic”?

Dividing a market into segments based on demograhic variables such as age,gender,family, lifestyle, religion,ect

What is meant by the segmentation method “geographic”?

Dividing a market into different geographical units such as nations, regions, cities, ect.

What is meant by the segmentation method “income”?

Dividing the market into different income segments often on the basis of social-economic grouping.

What is meant by the segmentation method “behavioural”

Dividing a market into segments based on the different ways customers use or respond to a product an d the benefits they seek such as fitness and health, ect.

What is a target maket?

A target market is the set of customers sharing common needs and wants that a business decides to target.

What are the influences on choosing a target market?

• The mission statement and corporate objectives

• The relative size of the segments and level of demand

• The nature of the product

• The nature of competition

• The nature of the market and needs of customers

What is a mass market?

A mass marker is where a business sells into the largest part of the market where there are many similar products offered by competitiors.

What is a niche market?

A niche market is where a busines targets a smaller segment of a larger market where customers have specific needs and wants.

What are the features of mass markets?

• Customers generally have less specific needs and wants

• Usually higher production output

• Often associated with low cost, highly efficient operations or market-leading brands

What are the features of niche markets?

• Very specific customer needs

• Lower production volumes

• Higher prices

• Reduced competition

What are the benefits of niche markets?

• less competition

• can often charge higher prices

• profit margins tend to be higher

• customers tend to be more loyal

• clear focus on a particular group of customers

• business may accumulate specialist skills and knowledge

What are the drawbacks of niche markets?

• Lack of economies of scale

• Risk of over dependence on a single product or market

• Likely to attract competition if successful

What is meant by market postitoning?

Market positioning is a place a product occupied in customers minds relative to competing brands.

What is meant by market mapping?

A market map illustrates the range of “positions” that a product can take a market based on two dimensions that are important to customers.

What are the possible examples of dimensions when market mapping?

• high price, low price

• high quality, low quality

• low volume, high volume

• necessity, luxury

What are the advantages of market maps?

• Helps identify “gaps” in the market

• Encourages the use of market research

What are the disadvantages of market maps?

• A gap in the market doesn’t guarantee there will be demand

• Reliability depends on the quality of the market research

What is meant by the marketing mix?

The marketing mix is the combination of elements used by a business to enable it to meet the needs and expectations of customers.

What are the 7Ps in the marketing mix

• Price

• Product

• Place

• Promotion

• People

• Process

• Physical environment

What is meant by product as one of the 7Ps?

What is meant by product as one of the 7Ps?

The product or service that the customer buys.

What is meant by price as one of the 7Ps?

How much the customer pays for the product.

What is meant by place as one of the 7Ps?

How the product is distributed to the customer.

What is meant by promotion as one of the 7Ps?

How the customer is found and persuaded to buy.

What is meant by people as one of the 7Ps?

The people who make contact with customers in delivering the product.