Flashcards · 8132 · Topic 5

Marketing flashcards

20 cards on Topic 5, subtopics 3.5.1 to 3.5.4. Pick a subtopic or study them all.

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3.5.1 Identifying and understanding customers

Why is it important to identify and satisfy customer needs?: To provide a product customers will buy, increase sales, select the correct marketing mix, avoid costly mistakes and be competitive.
How does marketing link to the business's objectives and other functions?: Business objectives are split into functional plans with clear links between operations, human resources, marketing and finance. Marketing plans follow from the objectives and depend on the other functions.
What can go wrong if a business does not understand its customers?: It may make a product few will buy, choose the wrong marketing mix, waste money on costly mistakes and lose sales to competitors who meet customer needs better.

3.5.2 Segmentation

The four types of market segmentation named in the specification: Gender, age, location and income. Segmenting lets the mix fit each group; too narrow a target can limit sales.
Market segmentation: Splitting a market into groups so each can be targeted.
Give an example of each type of segmentation: Gender: different ranges for men and women. Age: toys for under-fives versus teenagers. Location: raincoats stocked in wet regions. Income: budget and premium versions.
Why segment a market?: So the marketing mix fits each group and money is not wasted on customers who will not buy. The risk is that too narrow a target limits sales.

3.5.3 The purpose and methods of market research

Primary versus secondary market research: Primary: collected first-hand (questionnaires, surveys, interviews, focus groups). Secondary: information that already exists (internet research, the printed press).
Quantitative versus qualitative data: Quantitative: numbers (60% like the flavour). Qualitative: opinions and reasons (they find it too sweet).
A firm sells 9,000 units in a market of 150,000. The market grows to 165,000 and its sales stay the same. What happens to its market share?: Before: 9,000 ÷ 150,000 × 100 = 6%. After: 9,000 ÷ 165,000 × 100 = 5.5% (1 d.p.). Same sales, smaller share.
Why do businesses carry out market research?: To identify market opportunities and get a better insight into customers and competitors, collecting information about demand, competition and the target market.
One benefit and one drawback of a focus group and of internet research: Focus group (primary): gives reasons and opinions, but the group is small and may not be representative. Internet research (secondary): fast and often free, but may be out of date or unreliable.
Market size versus market share: Market size: the total sales of every business in the market. Market share: one firm's sales as a percentage of that total (its sales ÷ market sales × 100).

3.5.4 The elements of the marketing mix: price, product, promotion and place (4Ps)

The five pricing methods in the specification: Price skimming: high at first, then lowered. Price penetration: low at first to gain share. Competitive pricing: close to rivals. Loss leader: below cost to bring in customers. Cost-plus: unit cost plus a mark-up.
A unit costs £12 and the mark-up is 25%. What is the cost-plus price?: £12 × 1.25 = £15, giving £3 profit per unit. (Mark-up is profit as a percentage of cost.)
The stages of the product life cycle: Research and development (no sales), introduction (low sales, heavy promotion), growth (sales rising fast), maturity (sales peak and flatten), decline (sales fall: extension strategy or withdraw).
Extension strategies named in the specification: Update the packaging, add more or different features, change the target market, advertising, price reduction.
The Boston Matrix: the four categories: Star: high share, high market growth. Cash cow: high share, low growth. Question mark: low share, high growth. Dog: low share, low growth. Used to balance the portfolio, with cash cows funding stars and question marks.
Reasons for promotion, and factors that influence the promotional mix: Reasons: inform or remind, create or increase sales, create or change image, persuade. Factors: finance available, competitor actions, nature of the product, nature of the market, target market.
Methods of place (distribution) and e-commerce / m-commerce: Retailers reach the public but take a margin; wholesalers buy in bulk and reach many shops; telesales sell by phone. E-commerce (internet) and m-commerce (mobile) give wider reach and are always open, but bring security and delivery issues.