Marketing

What key features is the rapid growth of e-commerce a result of?

- Global reach - Ubiquity (access at any time from anywhere) - Interactivity (2 way communication between business and consumer) - Personalisation (marketing messages targeted at individuals based on spending habits) - Information richness - Universal standards (ease of access)

What are marketing objectives of non-profit-making organisations?

- High ethical standards maintained - Constant feedback on success of charity campaigns - Free publicity with aim of raising awareness ,capturing imagination - Promote work and aims of organisation to wide audience - Increase societal recognition - Maximise revenue

What are marketing objectives of for-profit organisations?

- Increase market share - Increase total sales in terms of value, volume or both - Increase average number of items purchased per customer visit - Increase frequency that a loyal customer visits - Increase number of new customers - Increase customer satisfaction - Increase brand identity

Discuss each part of the marketing mix for each stage of the product life cycle.

- Introduction Price: Probably high Promotion: High to raise awareness Place: Restricted outlets Product: New model launched - Growth Price: If penetration pricing was previously used, price may now be raised Promotion: High so consumers are convinced to buy repeat purchases Place: Growing numbers of outlets Product: Improvements and developments planned to maintain consumer appeal - Maturity Price: Prices kept at competitive levels due to competitors entering market Promotion: Brand imaging continues, growing need to stress positive differences with competitors' products Place: Highest geographical range of outlets possible Product: New models and accessories etc as part of extension strategy - Decline Price: Lower prices to sell off stock Promotion: Advertising likely to be limited Place: Eliminate unprofitable outlets for the product Product: Prepare to replace with other products

What are limitations of marketing planning?

- Plans that are not revised to meet changing internal or external conditions will become outdated - Plans are insufficient on their own, they must be reviewed constantly - Marketing plans need to be revised according to changes in market or consumer preferences

Why is packaging important?

- Protection - Attracting customers - Promotion and information - Differentiation and brand support

What are the roles of marketing planning?

- Provides focus to work of marketing department - Marketing strategies linked to SMART objectives will increase likelihood of a campaign's success - Communicating with finance functions for marketing activities - Planning ahead so marketing mix can be appropriate and fully integrated

How can market size be measured?

- Volume of sales (units sold) - Value of goods sold (revenue)

What strategies can the Boston matrix aid?

1. Building (supporting the problem child with additional advertising funding by the cash cow products) 2. Holding (continuing support for star products to maintain success) 3. Milking (taking positive cash flow from cash cow and injecting in problem child and star) 4. Divesting (stopping production and supply of worst performing dogs)

What are key values for marketing of services?

1. Building trust 2. Time for delivering the service 3. Deliverability 4. Relationships

What are types of e-commerce?

1. Business to business (B2B) Transactions conducted between a supplying business and a purchasing business 2. Business to customer (B2C) Transactions conducted between company and consumers who are the end-product users of the product/service 3. Consumer to consumer (C2C) Consumers trade with each other over the internet.

What is a market segment?

A sub-group of a market made up of consumers with similar characteristics, tastes and preferences.

What are methods of pricing and the pros and cons?

1. Cost-plus Adding fixed mark-up for profit to the unit price of a product. Pros: Costs of production will be covered, suitable for firms that are price-makers due to market dominance Cons: Does not take market/competitive conditions into account, tends to be inflexible, if sales fall then average costs rise and prices may also have to rise 2. Penetration Setting low prices with high promotion to achieve high volume of sales. Pros: Low prices should lead to high demand, establishing high market share Cons: Low profit margins so prices may need to increase in future which consumers may resist to 3. Market skimming High price for new product when product has USP or high elasticity of demand. Pros: High profit margins to help pay for development costs of new products Cons: May discourage consumers, may encourage competitors 4. Psychological Setting prices that take account of customer's perception of value of product. Pros: Prices reflect what consumers expect so likely to be in line with rest of marketing mix Cons: Price level and demand needs to be constantly reviewed as expectations may change 5. Loss leaders Product sold at very low price to encourage consumers to buy other products. Pros: Makes loss on one product but compensated on other products and increases market share Cons: Cheaper generic alternatives may be sold by competitors so complimentary products are not purchased from the loss leader business 6. Price discrimination Sells same product to different consumers at different prices. Pros: Uses price elasticity knowledge to charge different prices in order to increase total revenue Cons: Admin costs of different price levels, customers may switch to lower price market, consumers paying higher prices may resist an look for alternatives 7. Promotional Special low prices like BOGOF to gain market share or sell off excess stock Pros: Attracts new customers who may continue to buy when price is restored, allows selling of out-of-season stock, encourages multi-buys Cons: If used frequently then consumers may suspect that the higher non-discounted price can never be justified, lower prices may become established in consumers minds for lower quality product 8. Predatory/destroyer Deliberately undercutting competitors prices to try and force them out of the market Pros: Drives down prices which benefits consumers, may reduce no. of competitors in market Cons: If proven, is illegal and consumers may try to find alternatives if predator increases prices in the long term Price leadership: One business sets price for its products and other firms in market set same or similar prices Pros: Smaller businesses know what price they must aim to set, price leader may have lower unit costs so remain more profitable than competitors even with low prices Cons: Can be perceived as predatory, only operates effectively for undifferentiated products

What are types of distribution channels and their pros and cons?

1. Direct selling, no intermediaries (EG airline tickets) Pros: No mark-up or profit margin taken by intermediaries, producer has complete control over marketing mix, quicker, direct contact with customers which is good market research Cons: All storage and stock costs paid by producer, no retail outlets means consumers cannot try before they buy, no advertising paid by intermediaries, can be expensive to deliver directly to consumers 2 Single-intermediary channel (EG travel agents) Pros: Retailer holds stock and pays cost of this, retailer offers after-sales service, producers can focus on production not sales Cons: Intermediary takes profit mark-up, producer loses element of control over marketing mix, producer has delivery costs to retailer, retailers may sell products from competitors too 3. Two-intermediaries channel (Wholesaler buys goods from producer and sells to retailer, EG soft drinks, electrical goods, books) Pros: Wholesaler holds goods and buys in bulk from producer, rescues stock-holding costs, wholesaler pays for transport, may be best way to enter foreign markets where producer has no direct contact with retailers Cons: Another intermediary takes mark-up, more control over marketing mix lost, slows down distribution chain

What are the types of advertising?

1. Informative - give info, not create brand image 2. Persuasive - tries to create distinct brand image

What are the pros and cons of different USP's?

1. Lowest price Pros: Consumers have limited spending power so low prices will attract high proportion of consumers Cons: Bad impact on profit margins, may not fit with rest of marketing mix and may damage image. 2. Trust Pros: Customers want to know they are spending money well and making right decision. Cons: Difficult for new businesses to establish, can be damaged easily by external factors like bad feedback online. 3. Ethics Pros: Holds high values in some communities, people willing to 'pay the difference' for morals Cons: Loss of trust is business are not as ethical as they say they are, and ethics will not hold significant value for all consumers. 4. Convenience Pros: Free delivery, click and collect... preferable as most people want to save time and not have to put too much effort in Cons: Hard to gain differentiation as convenient options are now so widespread 5. Product features Pros: Difficult for competitors to copy if patented, can lead to good reputation associated with innovation. Cons: Research and development is both expensive and time consuming. May need to keep evolving to stay ahead of competition and up to date with consumer trends/habits.

What are sources of secondary research?

1. Market intelligence analysis reports (very detailed, expensive to obtain.) 2. Academic journals 3. Government publications 4. Local libraries and local gov offices 5. Trade organisations 6. Media reports and specialist publications 7. Internal company reports 8. The internet

What are types of sales promotion?

1. Price promotions (Temp reductions in price to encourage existing customers to buy more and to attract new customers. BUT will affect gross profit per unit and may create poorer brand image) 2. Money-off coupons (BUT may just encourage a consumer to buy what they would have bought anyway except for less, retailers may not be able to handle to the increase in demand in terms of having enough stock and proportion of consumers using the coupons may be small if reduction is minimal.) 3. Customer loyalty schemes (BUT discount offered affects gross profit per unit, admin costs to raise awareness, and loyalty impact is reduced by most businesses having a loyalty scheme now.) 4. Money refunds (BUT is a lot of effort for customers and delay before the refund may act as disincentive) 5. BOGOF (BUT reduce gross profit margin, makes consumers find it hard to justify normal price, current sales may increase but future sales may fall as consumers have stocked up) 6. Point-of-sale displays (BUT best ones are usually offered to best markets and new products may struggle for best position in stores) 7. Public relations (BUT not easily controllable as free publicity could give bad reviews) 8. Sponsorship (BUT become associated with what is being sponsored. If someone does not likely what is being sponsored they may not like the business either as a result)

What effect does e-commerce have on the marketing mix?

1. Product - Business selling over internet means it can stock wider range of products - Individual requirements can be built into the product/service to meet different needs - Product design may need to be altered to fit in with legal and cultural needs of different locations 2. Price - Prices can be compared more rapidly so more competitive pricing - Price discrimination through geographical regions more difficult - Can offer last minute deals 3. Promotion - Promotional opportunities expanded - Saves promo costs and reaches wider audience - Materials and methods may need adjusting to adapt to different legal and cultural requirements 4. Place - Smaller proportions of traditional stores

What are methods of primary research?

1. Surveys 2. Interviews 3. Focus groups 4. Observations 5. Test marketing (in geographical region before full launch)

Why do organisations carry out market research?

1. To reduce the risks associated with new product launches 2. To predict future demand changes 3. To explain patterns in sales of existing products and market trends 4. To assess most favoured designs, flavours, promotions and packages for a product

What is product orientation?

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. Pros: - Efforts concentrated into high quality goods, in the belief that the high quality will entice consumer interest Cons: - Arguably less competitive

What is convenience sampling?

Drawing representative selection of people because of ease of their volunteering or availability/accessibility.

What is a consumer profile?

A quantified picture of consumers of a firm's products, showing proportions of age groups, income levels, location, gender and social class.

What is market-orientation?

An outward-looking approach basing product decisions on consumer demand, as established by market research. Pros: -Reduces chances of new products failing in market - Likely to survive longer and make larger profits as consumer needs are being met - Constant feedback from consumers means product can be further developed and adapted to changing tastes before competitors do Cons: - If a business tries to respond to market trend/taste then it may overuse its resources or do nothing very well

What is social marketing?

As well as considering the demands of consumers, also considers the effects on all members of the public. It tries to balance company profits, consumer wants and society's interests. The main focus of social marketing is social good. The main focus of commercial marketing is financial return.

What is a brand? And brand value?

Brand: An identifying name, symbol, image or trademark that distinguishes product from competitors. Brand value: Premium that a brand has because its customers are willing to pay more for it than they would for non-branded generic products

What is stratified sampling?

Draws sample from specified sub group/segment of population and uses random sampling to select appropriate number from each group (proportionate)

What is market segmentation?

Identifying different segments within a market and targeting different products or services to them.

What is product branding and its pros and cons?

Each individual product is given own brand name and identity (Individual branding), EG Toyota created Lexus brand of cars Pros: Unconnected in consumers mind to parent company, meaning is one product isn't liked it will not lose sales for the other products Cons: Loses positive image of strong company brand

What is random sampling?

Every member of target population have equal chance of being chosen.

What is a unique selling point (USP)?

Factor that differentiates product from its competitors, like the lowest cost or highest quality, or first product of its kind. Can be based on any aspect of the marketing mix.

What is market share (%) calculated?

Firms sales in time period / total market sales in time period x 100

What is above-the-line promotion?

Form of promotion that is undertaken by a business paying for communications with consumers, like advertising.

What is quota sampling?

Gathering data from group chosen out of specific sub group (e.g. 100 individuals between ages of 20 and 30)

What are homogenous products?

Goods that are physically identical or viewed as identical by consumers.

What is a product positioning map/ perception map?

Graph that analyses consumer perceptions of each of a group of competing products in respect to 2 product characteristics. For example, low/high price and low/high quality.

What are consumer durables?

Manufactured products that can be reused and are expected to have a reasonably long life, such as cars.

What are extension strategies?

Marketing plans that extend the maturity stage of the product before a brand new one is needed 1. Add new features to original product - Can be developed and marketing faster and at lower cost than completely new product - BUT consumers may not buy into a revised product as the original one is still ageing 2. Repackage product - Relatively cheap and fast - BUT consumers may quickly realise the product is the same and feel they are being misled 3. Discount the price - Make more sales before new product is released - BUT bad for image 4. Rebrand - Opens up new market segments, can be presented as a new product - Expensive and not guaranteed to be worthwhile 5. Sell into new markets (like export markets) - Can increase sales if product is not viewed as too old in these markets - BUT product and promotion may need to be redesigned to meet local laws and culture

What Is a mass market, has marketing and its advantages?

Mass market: Market for products that are often standardised and sold in large quantities. Mass marketing: Selling the same products to the whole market with no attempt to target groups within it. Pros: (Are also the cons of niche marketing) - Economies of scale - Fewer risks, as changes in buying habits will have less impact on sales than in a niche market.

What is the Boston consulting group matrix?

Method of analysing the product portfolio of a business in term of market share and market growth 1. Cash cow: Low market growth, high market share - Well-established product in mature market - Creates high positive cash flow and is profitable - Sales high, promo costs low due to high consumer awareness - Cash milked and injected into other products 2. Star: High market growth, high market share - Successful - Promo costs high to differentiate product and reinforce brand image - High amounts of income - Potential cash cows of the future 3. Problem child: High market growth, low market share - Consumes resources and generates little return - Heavy promo costs to become established if its a new product - Uncertain future of product so quick decisions need to be made as to whether to withdraw it from market or develop it further 4. Dog: Low market growth, low market share - Offer little to the business - Need to be replaced shortly or business could withdraw from market sector altogether and enter faster growing ones

What is a niche market and niche marketing, and its advantages?

Niche market: Small and specific part of larger market. Niche marketing: Identifying and exploiting small segment of larger market by developing products to suit it. Pros: (Are also the cons of mass marketing) - Small firms can survive and thrive - If the market is unexploited by other firms, prices can be higher - Can be used by large firms to develop status and image

What is manufacturer's branding and its pros and cons?

Producers establish brand image of product or daily of products, often under company name. EG Levi's or Coca Cola. Pros: Successful branding leads to 'unique personality' of product that consumers are willing to pay premium price for Cons: Brand has to be constantly promoted and defended

What is below the line promotion?

Promotion that is not a directly paid for means of communication, but instead based on short-term incentives to purchase, like sale promotion techniques

What are pros and cons of the Boston matrix?

Pros: - Analyses performance and current position of existing products - Helps to plan action to be taken with existing products - Helps to plan the introduction of new products Cons: - On its own cannot tell a manager what will happen next with any product - Only a planning tool, oversimplifies a complex set of factors determining product success - Assumption made that higher rates of profit are directly related to high market shares which is not the case if sales are being gained by reducing prices

What are the pros and cons of market segmentation?

Pros: - Businesses can define their target market clearly and design and products goods that specifically suit this segment - Helps to identify gaps in market - Different marketing tactics can be focused on different segments - Small firms that cannot compete in whole market can specialise in a couple - Price discrimination can be used to increase revenue and profits Cons: - Research and development costs high - Promotional costs high - Danger if consumers in a segment change purchasing habits completely

What are pros and cons of e-commer to consumers?

Pros: - Convenient to use - Online stores open 24/7 - Prices often lower than for same goods from traditional retailers - No time or money spent on travelling to stores - Ability to sell to other consumers (C2C) - Ability for have businesses bid for custom through auction sites Cons: - Must have reliable internet connection - Cannot try before buy - Often have to pay delivery cost - Concern over security (credit card fraud and phishing) - Delay in receiving goods due to delivery time

What are pros and cons of using the internet to promote products?

Pros: - Improved audience reach - Targeted marketing based - Interactivity with consumers - Performance metrics (can track which type of advertisement attracts more people) - Speed of transmission (good feedback will go further) Cons: - Lack of skill in small business who do not have professionals to deal with it - Time investment (managing the social media account every day for example) - Negative feedback - Performance metrics (not as insightful on social media as emails for example) - Security issues

What are pros and cons of e-commerce to businesses?

Pros: - Inexpensive (relatively) - Can reach Worldwide audience - Data and performance metrics used for research - Computer ownership and internet access increasing around world - lower fixed costs than traditional retail stores Cons: - Limited access or slow internet in some countries - Consumers cannot try before buy which may reduce sales - Product returns may increase as result of this - Website must be kept up to date and use friendly - Businesses must remain competitive as price comparisons are easy - ICT specialist needed

What are pros and cons of using secondary data?

Pros: - Often obtainable cheaply - Assists with planning primary research - Quick (do not need to organise own methods etc) - Allows comparison of data from various sources Cons: - May be outdated - May not be entirely relevant - Unknown data collection methods and accuracy - Might not be available for new product developments

What are pros and cons of primary research?

Pros: - Up to date - Relevant - Confidential (no competitors can access it) Cons: - Costly - Time consuming - Doubts over accuracy and validity due to need for sampling and possible sampling error

What is own-label branding and its pros and cons?

Retailers create own brand name and identity for range of products. EG Tesco has F&F clothing brand Pros: - Cheaper than name-brand products - Each own-brand label appeals to different groups of consumers - Often little spent on advertising as in-store promotions can instead be used Cons: - Consumers perceive products to be lower-quality

What is family branding and its pros and cons?

Selling several related products under one brand name (umbrella branding), EG mars bar, mars ice cream and mars energy drinks Pros: Marketing economies of scale, makes new product launch easier Cons: Poor quality of one product under the brand name may damage image of all of the products

What is e-commerce?

The buying and selling of goods and services on the internet.

What is a channel of distribution?

The chain of intermediaries a product poses through from producer to final consumer

What is company/corporate branding and its pros and cons?

The company name is applied to products, which then becomes then brand name. EG virgin airlines, railways, phone providers Pros: Marketing economies of scale, makes new product launch easier Cons: Poor quality of one product under the brand name may damage image of whole company

What is the marketing mix?

The key decisions that must be taken in the effective marketing of a product. -Price -Product -Promotion -Place

What is ease of entry?

The lack of barriers for establishment of new competitors in a market.

What is marketing?

The management task that links the business to the customer by identifying and meeting the needs of customers profitably, by getting the right product at the right price to the right place at the right time

What is a target market?

The market segment that a particular product is aimed at.

What is the product life cycle?

The pattern of sales recorded by a product from launch to withdrawal from the market. 1. Introduction - Sales low 2. Growth - Sales grow significantly (if promoted well) - Eventually slows due to increasing competition, tech changes making the product less appealing, changes in consumer tastes and market saturation. 3. Maturation/saturation - Sales do not grow, but do not decline either - Everyone who will want the product already has one 4. Decline - Sales decline - Product becomes obsolete

What is viral marketing?

The use of social media or text messages to increase brand awareness or sell products

What is guerrilla marketing and its risks?

Unconventional way of performing marketing activities on very low budget. Risks: - Not received well by conventional customers - Could result in misunderstandings (aimed at youth and social media users more than older generation)

What are pros and cons of using the median?

Used in negotiations Used in advertising Pros: - Less influenced by extreme result than mean so is more representative Cons: - Element of inaccuracy for grouped data - Value is approximated when the number of items in results is even - Cannot be used for further statistical analysis

What are pros and cons of using mean calculations?

Used to indicate likely sales levels Used to make comparisons between sets of data, like attendance rates at different places Pros: - Includes all data - Well recognised as is widely used so more understood - Can be used for further statistical analysis, giving it more relevance Cons: - If affected by extreme results, whole conclusion will be distorted - Commonly not a whole number which is not useful in some cases

What is snowball sampling?

Using existing members of a sample study group to recruit further participants through their acquaintances.

What is cluster sampling?

Using number of specific groups to draw samples from instead of whole population, like using one town or region.

What are pros and cons of using the mode?

used for stock-ordering purpose; reorder most of most commonly bought stock Pros: - Easily observed and no calculation necessary Cons: - In grouped distributions it is an estimate only which may not be accurate - Does not consider all data - Confusion is there is more than one modal result