3. Decision Making to Improve Marketing Performance

What are marketing objectives?

A specific goal or target related to marketing activities and business performance

What are main types of marketing objectives?

• Sales Volume

• Sales Value (Revenues)

• Sales Growth (%)

• Market Share (%)

• Brand Loyalty/Awareness

What is the value of setting objectives?

• Aligns marketing with corporate objectives.

• Focuses marketing priorities and resource allocation.

• Enables measurement of marketing performance.

What are potential problems with marketing objectives?

• Fast-Changing External Environment:

  • Examples: Legislation changes, new competitors.

• Conflict Between Objectives:

  • Example: Increasing market share via price cuts damaging brand perception.

• Overly Ambitious Objectives:

  • Example: Growing market share without adequate resources.

What are internal influences on marketing objectives?

• Corporate Objectives: Marketing objectives should align with overarching corporate goals.

• Finance: Profitability, cash flow, and liquidity impact marketing activities.

• Human Resources: Workforce quality and capacity affect service businesses significantly.

• Operational Influences: Operations enable cost and quality competitiveness.

• Organisational Culture: A marketing-oriented culture focuses on customer needs.

What are external influences on marketing objectives?

• Economic Environment: Economic growth rate impacts demand; exchange rates affect international marketing.

• Competitor Actions: Objectives must account for potential competitor responses.

• Market Size Growth and Segmentation: Slower growth reduces the likelihood of revenue growth or new product development.

• Technological Change: Rapid technological advancements shorten product life cycles and create innovation opportunities.

• Social and Political Change: Changes to legislation and societal attitudes impact marketing.

What is primary research?

Data collected first-hand for a specific purpose.

What are examples of primary research?

Focus groups, interviews, surveys, mystery shoppers, product testing and trials

What are advantages of primary data?

• Directly focused on research objectives.

• Tends to be up-to-date.

• More detailed insights into customer views.

What are disadvantages of primary research?

• Time-consuming and often costly.

• Risk of survey bias; samples may not be representative.

What is secondary research?

Data that already exists, collected for a different purpose.

What are examples of secondary data?

Market reports, trade and industry associations, sales transactions, big data, analytics

What are advantages of secondary data?

• Often free and easy to obtain.

• Good source of market insights.

• Quick to access and use.

What are disadvantages of secondary data?

• Can quickly become out of date.

• Not always tailored to specific research needs.

• Specialist reports can be expensive.

What is the focus of quantitative research?

Data (e.g., How many?, How often?, Who?, When?, and Where?

What is the sample size quantitative research?

Often larger, more statistically valid samples

What are methods of quantitative research?

Surveys (telephone, postal, face-to-face, online)

What are benefits of quantitative research?

• Data is relatively easy to analyse.

• Numerical data provides trend insights.

• Comparable with other sources.

What are drawbacks of quantitative research?

• Focuses on data, not explanations.

• May lack reliability if the sample size is invalid.

What is the focus of qualitative research?

Opinions, attitudes, beliefs, and intentions (e.g., Why?, Would?, or How?)

What is the goal of qualitative research?

Understand customer behaviour and responses

What are methods of qualitative research?

• Focus groups and interviews.

• Focus Group: A group asked about their perceptions, opinions, beliefs, and attitudes towards a thing.

What are benefits of qualitative data?

• Essential for new product development.

• Focuses on understanding customer needs.

• Can highlight issues needing addressing (e.g., why customers don’t buy).

• Effective for testing marketing mix elements.

What are drawbacks of qualitative data?

• Expensive to collect and analyse.

• Risk of unrepresentative samples.

• Subject to bias.

What is sampling?

Gathering data from a sample of respondents representative of the target market.

What are benefits of sampling?

• Small sample sizes can provide useful insights if they are representative.

• Reduces risk and costs before marketing decisions.

• Flexible and relatively quick.

What are drawbacks of sampling?

• Risk of unrepresentative samples leading to incorrect conclusions.

• Risk of bias in research questions.

• Less useful in rapidly changing market segments.

What is market growth?

The percentage growth of the overall market size (value or volume) over time

What is the significance of market growth?

Key indicator for existing and potential market entrants

What is the calculation for market growth?

\text{{Market Growth Percentage}} = (\frac{\text{{Market size this period}}}{\text{{Market size last period}}} - 1) \times 100

What is market growth?

The percentage share of the overall market held by a product, brand, or business

What is the significance of market growth?

Indicates competitive advantage; key to monitor significant changes

What is the calculation for market share?

\text{{Market Share Percentage}} = \frac{\text{{Business Sales}}}{\text{{Market Sales}}} \times 100

What is a correlation?

Strength of a relationship between two variable

What are types of variables?

• Independent

• Dependent

What are independent variables?

Factor causing change in the dependent variable

What are dependent variables?

Variable influenced by the independent variable

What are scatter charts?

Used to measure correlation by plotting data points. Dependent variable on the y-axis, independent variable on the x-axis

What are types of correlation?

• Positive Correlation: Both variables increase together.

• Negative Correlation: One variable increases as the other decreases.

• No Correlation: No discernible relationship.

What is the strength of correlation?

• Strong Correlation: Data points close to the line of best fit.

• Weak Correlation: Data points widely spread from the line of best fit.

What are confidence intervals?

Percentage probability that an estimated range includes the actual value

What is the value of confidence intervals in business?

Helps evaluate the reliability of estimates

What are examples of confidence intervals?

• Quality management: Machine reliability, quality control issue detection.

• Market research: Sales forecasting reliability, customer survey data.

• Risk management: Sales forecast risks, competitor action scenarios.

• Budgeting and forecasting: Revenue and cost ranges, new product sales forecasts.

What is price elasticity of demand (PED)?

Measures the responsiveness of demand to a change in price

What is the equation for price elasticity of demand?

PED = \frac{\% \text{{ Change in Quantity Demanded}}}{\% \text{{ Change in Price}}}

What is the significance of price elasticity of demand?

• If PED > 1 (Price elastic): Revenue increases with a price cut; revenue falls with a price increase.

• If PED < 1 (Price inelastic): The opposite occurs.

What factors influence price elasticity of demand?

• Brand strength: Strong brands tend to be inelastic.

• Necessity: Necessary products are more inelastic.

• Habit: Habitual products tend to be price-inelastic.

• Availability of substitutes: Products with alternatives are price-elastic.

• Time: Short-run price changes have less impact than long-term changes.

What is income elasticity of demand?

Measures the responsiveness of demand to a change in income.

What is the equation for income elasticity of demand?

YED = \frac{\% \text{{ Change in Quantity Demanded}}}{\% \text{{ Change in Income}}}

What is the income of elasticity of luxury items?

• YED > 1

• As income grows, proportionally more is spent on luxuries (e.g., consumer goods, expensive holidays).

What is the income of elasticity of necessities?

• 0 < YED < 1

• As income grows, proportionally less is spent on necessities (e.g., staple groceries).

How do you interpret income elasticity?

Normal Products: A rise in income results in a rise in demand; a fall in income results in a fall in demand.

What is the income elasticity of demand?

• YED < 0

• As income rises, demand falls because consumers switch to better alternatives.

What is the extended marketing mix?

Combination of marketing elements used to meet customer needs.

What is the rationale of income elasticity?

Elements should work together for the desired effect.

What are the traditional Ps?

• Product: What the customer buys.

• Price: How much the customer pays.

• Place: How the product is distributed.

• Promotion: How the customer is persuaded to buy.

Which are the new Ps?

• People: Those in contact with customers.

• Process: Systems delivering the product.

• Physical Environment: Elements experienced by the customer.

What are the influences on marketing mix?

• Finance: Cash flow, discounts, marketing budget.

• Technology: Advanced products, databases, online selling, social media.

• Market research: Competition, substitutes, consumer opinions, market segment.

What are other influences on the marketing mix?

• Power of buyers and suppliers.

• Quality of promotion.

• Price elasticity of demand.

• Reputation of the business.

• Convenience of location.

What are the effects of changes in the elements of the marketing mix?

• Product: Features appealing to the target market.

• Price: Affects volume and profitability.

• Promotion: Increases sales if cost-effective.

• Place: Availability in many places vs. matching a certain image.

• People: Knowledgeable, enthusiastic, and well-trained staff.

• Process: Efficient processes to satisfy customer needs.

• Physical Environment: Favourable impression to encourage purchases.

What are product decisions for industrial marketing?

• Larger transactions

• Specialist buyers and sellers

• Emphasis on quality, informative advertising, pricing, and buyer-seller relationships

What are types of consumer marketing products?

• Convenience products

• Shopping products

• Speciality products

What are product decisions for convenience products?

• Consumed and purchased regularly and by a very large population. Purchased by habit.
  Augmented qualities impact shopping.

• Low price - need to sell in large volumes.

• Impulse buys, placed near the tills in shops.

What are product decisions for shopping products?

• Consumed and purchased quite often, but less regularly than convenience products.

• Displayed less prominently in stores and are likely to be available in fewer stores.

• Augmented qualities, such as a fashionable brand.
  For sellers, there is more scope for higher prices and greater added value than for convenience products.

What are product decisions for speciality products?

• Unique characteristics

• Consumers are more selective. Image and brand matter.
  People travel some distance to purchase.

• Price is not a key consideration, so high profit margins can be gained.

What are product features?

• Reliability

• Functions and compatibility with other devices

• Size and weight

• Convenience of use

• Fashion

• Aesthetic qualities

• Durability

• Value for money

What is technology and marketing decision making?

• Technology has revolutionised most aspects of marketing decision-making

• Identify the most important technologies for their marketing strategy and activities.

How do you decide which technological solutions are most appropriate for their business?

• Pricing (most marketing technology is sold as "software as a service" with per-user pricing

• Ease of use (for those employees tasked with implementing the technology

• Compliance (e.g. with fast-changing regulations about data protection

What are examples of Technology and Marketing Decision-Making?

• Analytics and customer insights

• Dynamic pricing

• Audience reach and segmentation

• Customer relationship management (CRM)

• Campaign testing

• Competitor analysis

What is market mapping?

Illustrates the range of ‘positions’ that a product can take in a market based on two dimensions important to customers

What are advantages of market mapping?

• Helps spot gaps in the market.

• Useful for analysing competitors.

• Encourages use of market research.

What are disadvantages of market mapping?

• A ‘gap’ doesn’t guarantee demand.

• Not a guarantee of success.

• How reliable is the market research?

What is the process of market segmentation?

1. Choose which customers to serve.

   • Market segmentation (parts of a market)

   • Targeting (segments to enter)

2. Decide how to serve those customers.

   • Product differentiation (what makes it different)

   • Market positioning (how customers perceive the product)

What is market segmentation?

Dividing a market into parts reflecting different customer needs.

What are the main categories of market segmentation?

• Demographic Segments

• Geographic Segments

• Income segments

• Behavioural Segments

What are the benefits of market segmentation?

• Focuses resources on successful market parts.

• Grows market shares in fast-growing segments.

• Helps new product development.

• Makes the marketing mix more effective.

What are the drawbacks of market segmentation?

• Imprecise science with unreliable data.

• Identifying a segment doesn’t guarantee reaching customers.

• Markets are dynamic and fast-changing; so too are the segments.

What is a target market?

The set of customers sharing common needs and wants that a business decides to target.

What are the main strategies for target markets?

• Mass Marketing (undifferentiated):

  • Targets the whole market, ignoring segments.
    Products focus on common needs.

• Segmented (differentiation):

  • Targets several market segments.
    Products designed for each segment.

  • Requires separate marketing plans.

• Concentrated (niche):

  • Focuses narrowly on smaller segments.

  • Aims for a strong market position within niches.

What is market positioning?

The place a product occupies in customers’ minds relative to competing products

What is positioning and competitive advantage?

• Customers choose products based on the value proposition.

• Superior value provides competitive advantage

What are possible positioning strategies?

• Offer more for less.

• Offer more for more.

• Offer more for the same.

• Offer less for much less.

What is a mass market?

• The largest part of the market where many similar products are offered by competitors and customers

• Customer needs and wants are more

What is a niche market?

A specific segment of the market targeting specialised customers with distinct preferences and needs.