Flashcards · 7115 · Topic 3

Marketing flashcards

24 cards on Topic 3, subtopics 3.1 to 3.4. Pick a subtopic or study them all.

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3.1 Marketing, competition and the customer

Role of marketing: Identifying and satisfying customer needs, maintaining customer loyalty, and building customer relationships. Loyalty is the repeat buying; a relationship is the contact that encourages it.
Why do markets become more competitive?: Easier entry for new firms, online selling, global rivals, price comparison websites and better-informed customers.
Niche and mass marketing: Niche: a small, specific market; fewer rivals and a higher price possible, but small sales and risk if tastes change. Mass: a large, general market; high volumes and lower unit costs, but more rivals and price competition.
Market segmentation, and the examples in the syllabus: Dividing a market into groups of customers with similar characteristics or needs. Examples: age, socio-economic grouping, location and gender.
Benefits of market segmentation: Products, prices and promotion aimed at each group, less wasted spending, gaps in the market found, and possibly higher sales and loyalty.

3.2 Market research

Primary and secondary research: Primary: new data collected first-hand; specific and up to date, but slow and costly. Secondary: existing data collected by others; cheaper and quicker, but may be out of date or not specific.
Primary research methods: Postal questionnaires, online surveys, interviews and focus groups.
Secondary research methods: Online research, government sources, and paying for commercial market research reports.
What affects the accuracy of market research?: Sample size and how representative it is, clear non-leading questions, honest and unbiased researchers and respondents, recent data from a reliable source, and enough people responding.
45 of 150 respondents choose option B. What percentage is this, and what is its pie chart angle?: 45 ÷ 150 × 100 = 30%. Angle = 45 ÷ 150 × 360 = 108°.

3.3 Marketing mix

Stages of the product life cycle: Development (no sales), introduction (low sales), growth (rising fast), maturity (peak, flat), decline (falling).
Extension strategy, with examples: An action to lengthen the life of a product before it declines: new packaging or design, new variants, new markets, new uses, a price change, fresh promotion.
Cost-plus, competitive, penetration, skimming and promotional pricing: Cost-plus: unit cost plus a mark-up. Competitive: in line with many similar rivals. Penetration: low launch price to gain share fast. Skimming: high launch price, lowered later. Promotional: short-term cut to clear stock or boost sales.
A unit costing 12 sells at 15. What is the mark-up on cost, and the profit as a share of price?: Mark-up = 3 ÷ 12 × 100 = 25% of cost. Profit = 3 ÷ 15 × 100 = 20% of the selling price.
Price elastic and price inelastic demand: Elastic: quantity demanded changes proportionately more than price; a price cut can raise revenue. Inelastic: quantity demanded changes proportionately less than price; a price rise can raise revenue.
Distribution channels: via wholesaler, via retailer, direct: Wholesaler: wide reach and holds stock, but several margins and less control. Retailer: shops reach customers, but take a margin. Direct: the producer keeps the whole margin and customer data, but pays delivery and has less reach.
Advertising and sales promotion: Advertising: a paid message that builds awareness and image over time. Sales promotion: a short-term incentive such as discounts, samples, loyalty cards or competitions.
E-commerce: opportunities and threats for the business: Opportunities: wide reach, open all hours, lower costs, customer data. Threats: heavy competition, security and website failures, delivery costs.

3.4 Marketing strategy

Marketing strategy: The plan for how a business uses the marketing mix to reach its marketing objectives with its target customers. The four parts must be consistent with each other and the budget.
Misleading promotion, faulty goods and dangerous goods: Misleading promotion: claims, prices or images that give a false impression. Faulty goods: do not work as they should or as described. Dangerous goods: could harm the user or others.
Effects of legal controls on marketing strategy: Claims must be provable and adverts checked, more testing and quality control, refunds, replacements and recalls, so costs rise; but customers trust the business more and honest firms are protected.
Problems of entering foreign markets: Cultural differences (language, tastes, religion, customs, symbols), lack of knowledge of customers, rivals, rules and distribution, the cost of distance, and established local brands.
Joint venture and licensing as ways into a foreign market: Joint venture: local knowledge and shared cost and risk, but shared profit and possible disagreements. Licensing: another firm makes or sells the product for a fee or royalty; low cost and risk, but weaker control of quality and image.
A licensee sells $800,000 of goods and pays a 5% royalty. What is the royalty?: 0.05 × 800,000 = $40,000