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Flashcards · 4BS1 · Topic 4

Marketing flashcards

21 cards on Topic 4, subtopics 4.1 to 4.3. Pick a subtopic or study them all.

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4.1 Market research

Purpose of market research
Collecting and analysing information about customers, competitors and the market, to reduce risk and inform business decisions such as price, product, location and stock levels.
Primary research methods
Surveys, questionnaires, focus groups, observation and test marketing.
Secondary research methods
The internet, market reports and government reports.
Primary and secondary research compared
Primary: collected first-hand; costs more and takes longer, but fits the question exactly and rivals cannot see it. Secondary: already exists; cheaper and quicker, but may not fit and rivals often have it.
Quantitative and qualitative data
Quantitative: numbers, how many or how much (“35% would buy weekly”). Qualitative: opinions and reasons, why (“The box is hard to open”).
What affects the reliability of market research data?
Sample size, whether the sample is representative, bias in questions, the age of the data and its source.

4.2 The market

Why marketing is important
Satisfying customer needs, building customer relationships and keeping customer loyalty, which brings repeat custom more cheaply than winning new customers.
Market orientation and product orientation
Market orientation starts from customer wants, found by research. Product orientation starts from what the business makes.
Niche and mass markets
Niche: a small specialised segment; less competition and a premium price possible, but a small base. Mass: the whole market; large volume and economies of scale, but strong competition and thin margins.
Market segmentation and its bases
Dividing a market into groups with shared features so product, price and promotion can be aimed at them. Bases: location, demographics, lifestyle, income and age.
Can a business’s sales rise while its market share falls?
Yes, if the whole market grows faster than its sales. Share stays the same if both grow at the same rate.
How can a business respond to increased competition?
Improve quality or service, change prices, promote more, or find a niche. Price wars can reduce profit.

4.3 The marketing mix

Stages of the product life cycle
Introduction (low sales, build awareness), growth (rising fast), maturity (levelling, defend share), decline (falling: extend, cut costs or withdraw).
Extension strategies
Actions to delay a product’s decline: a new market or segment, new packaging, a new feature or flavour, a price change, or fresh promotion.
The Boston matrix
High growth, high relative share: star. High growth, low share: question mark. Low growth, high share: cash cow. Low growth, low share: dog. Relative share = own share ÷ largest rival’s share.
Pricing strategies in the specification
Cost plus (unit cost plus a mark-up), penetration (low launch price), skimming (high launch price, lowered later), competition (close to rivals), and promotional (a temporary price cut).
Variable cost 6.00, fixed costs 9,000, output 3,000, mark-up 50%. Find the cost-plus price.
Unit cost = 6.00 + 9,000 ÷ 3,000 = 9.00. Mark-up = 9.00 × 0.5 = 4.50. Price = 13.50.
Retailer and e-tailer
Retailer: a shop selling to the public; customers can see and try, but the retailer takes a share of the price. E-tailer: sells online; low premises costs and a wide market, but delivery and returns costs.
Above-the-line and below-the-line promotion
Above the line: paid media aimed at a wide audience (TV, radio, press, cinema). Below the line: other, often targeted methods (special offers, trials, vouchers, direct mail).
Public relations, and technology in promotion
Public relations: managing how the public sees the business, not paid advertising. Technology: targeted online advertising, viral advertising through social media, and e-newsletters.
Why does a brand matter?
Customer loyalty, support for a higher price, easier launches of new products, and standing out from rivals.

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