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Marketing
National 5 Business: Customers, Market Research, Marketing Mix, Technology
| Term | Definition |
|---|---|
| What is marketing? | Marketing involves trying to meet the needs and wants of customers. Marketing is one of the functional activities of a business. |
| What are markets? | A place where customers (the buyer) and sellers (the supplier) come togther. Goods and services are supplied to customers in a market. |
| What markets are there? | On a website (e-commerce), in a shop, over the telephone, through an internert-enabled phone, tablet, or computer |
| E-Commerce (Market) | Products sold online for customers to buy |
| In a shop (Market) | Products sold on shelves for customers to look at and buy |
| Over the telephone (Market) | Telephoning customers and encouraging them to buy products |
| Through an internet-enabled phone, tablet, or computer (Market) | Products sold through an app |
| Why is marketing important? | Can attracts new customers, allow business to enter new markets, can help business grow (market share), can increase the amount of profit a business makes |
| What is a target market? | The specific group(s) of people which a business targets their product towards |
| Why are target markets important? (One) | Ensures the product is suitable and specific to the needs of the customer group which means an increase in sales as it meets the needs and wants of the customer group |
| Why are target markets important? (Two) | Ensure the product is sold in the most suitable place which means an increase in sales as it is more convenient for customers to purchase the product |
| Why are target markets important? (Three) | Ensure the price is suitable for the target market so higher quality products can be charged at higher prices which means an increase in profits |
| Why are target markets important? (Four) | Ensure advertising and promotion are targeted towards the correct customer group which means money won't be wasted on promoting products to the wrong market segements |
| Different ways to segment the market | Gender, Age, Occupation, Beliefs, Income, Geographical Location, Lifestyle |
| Gender (Market Segment) | Targeting towards a specific gender (e.g. perfumes, deodorant) |
| Age (Market Segmentation) | Targeting towards a specific age group (e.g. toys, holidays) |
| Occupation (Market Segmentation) | Targeting towards people who do a particular job |
| Beliefs (Market Segmentation) | Targeting towards those who have a specfic belief |
| Income (Market Segmentation) | Targeting towards a particular level of income (e.g. holidays, branded/exclusive products) |
| Geographical Location (Market Segmentation) | Targeting towards people who live in a particular location (e.g. different clothing depending on climate) |
| Lifestyle (Market Segmentation) | Targeting towards people who lead a particular lifestyle (e.g. fitness) |
| Product (Marketing Mix) | The actual item (good or service) that is produced by the business and then sold in a market. |
| Price (Marketing Mix) | The price the business charges the customer to buy the product. |
| Place (Marketing Mix) | How the business makes the product available to the customer and where the product is sold. |
| Promotion (Marketing Mix) | How customers are made aware of the product and encouraged to buy it. |
| What are the stages of product development? | -Market research is carried out to find out what the customer wants. -Ideas for the product are generated based on market research information, and then the ideas are analysed -A model of the product might be created - this is known as a prototype. This |
| What are risks of product development? | -Customers might not want the product and therefore not buy it. -The money invested into developing the product would be wasted and this could put business into financial difficulty. -The reputation of the business could be damaged if it produces a prod |
| What are the stages of the product life cycle? | Introduction, Growth, Maturity, Decline |
| Introduction (Product Life Cycle) | The product is introduced onto the market. Lots of advertising and promotion to encourage sales. |
| Growth (Product Life Cycle) | Sales of the product are growing. Sales are growing because more customers know that it exists as a result of lots of promotion during introduction. |
| Maturity (Product Life Cycle) | Sales of the product reach their highest point and because sales are at their highest, this is the most profitable stage. |
| Decline (Product Life Cycle) | Sales of the product begin to fall. This is because the product is getting older and newer versions are coming onto the market |
| customers no longer want it. | |
| How can a business extend the life cycle of a product? | Changing the name (Rebranding) Changing the price Changing the place Changing the product (Making improved versions) Changing the promotion methods Changing the packaging Changing the usage |
| Brand | A name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors |
| Own Brand | A product which is sold under the brand name of a supermarket chain or other retailer rather than under the name of the business which manufactures the product |
| Advantages of Branding | Recognisable to customers and can act as a marketing and promotion tool, helps customers to distinguish a business from competitors Encourage customers to be brand loyal and make repeat purchases Higher prices can be charged because people associate bra |
| Disadvantages of Branding | If a product within the brand is poor quality it can damage the reputation of the whole brand name Some people try to copy brands and produce their own fake product. This gives customers the impression that it is a real branded product, but isn't (which |
| Advantages of Packaging | Protects the product during transport Serves as advertising for the product Can be designed to appeal to the target market Informs the customer about how to use the product |
| Disadvantages of Packaging | Can be expensive and time consuming to design If the packaging isn't recyclable then it can have a negative impact on the environment |
| What factors need to be considered when setting the price of a product? | The life cycle of the product (Demand is high during introduction so higher prices, demand is low during decline so lower prices) The target market of the product The price charged by competitors How much it costs to make the product How much profit i |
| Low Price | The price charged is lower than the price charged by competitors. The product will be bought by customers because it is cheaper than competitors. |
| High Price | The price charged is higher than the price charged by competitors. The product will be bought by the customers because they think it is of a higher quality then competitors. |
| Promotional Pricing | The price charged is lower than normal for a short period. The product will be bought by customers because it is on special offer. |
| Cost-plus Pricing | The cost of making the product is calculated before a % is added on for profit. This method ensures that the cost of making the product is covered and a profit is made. |
| Psychological Pricing | The price charged by the business makes the customer think the product is cheaper than it actually is. Customers think that the product is cheaper and therefore buy it. |
| Price Skimming | The price is initially set high and will then reduce over time. The initial costs of making and advertising the product can be recovered. |
| Penetration Pricing | The price is initially set low and will then increase over time. The business can enter a new market and quickly gain market share. |
| Price Discrimination | The price charged for the product is different depending on the group of customers. This increases sales as lots of different customers can buy the product. |
| Destroyer Pricing | The price charged is so low competitors can't match it. The aim of this is to force competitors out of the market. |
| Loss Leaders | The product is sold at a loss. This encourages customers to buy other products from the business. Profit is made from the total purchases the customer makes. |
| What factors need to be considered when setting the location of a shop? | How close customers are How close parking facilities are How close competitors are How suitable the infrastructure is How many employees are available The footfall of the area The environmental impact on the area Availability and cost of suitable p |
| What are the methods of distribution? | Road, Rail, Air, Sea |
| Advantages of Road | Often cheaper than other methods Delivery is often quick Customer receives the products directly to their door |
| Disadvantages of Road | It's difficult to transport large products Not as environmentally friendly as other methods Roadworks might cause delays |
| Advantages of Rail | Large products can be transported Large quantities can be transported |
| Disadvantages of Rail | There isn't a train station in every location or even a rail line It's not a door-to-door service |
| Advantages of Air | Products can be transported across the world more quickly than by sea Large amounts of small products can be transported |
| Disadvantages of Air | Large items can't be transported Products need to be taken to an airport to be loaded onto the aircraft - this could be expensive It's not a door-to-door service |
| Advantages of Sea | Large products can be transported Products can be transported across the world |
| Disadvantages of Sea | It's time consuming to transport products across the world It's not a door-to-door service |
| Advantages of E-Commerce | Customers worldwide can be targeted Customers can buy online 24/7 Product information can be accessed and updated quickly 3D views of the product can be seen Stock availability can be checked instantly |
| Disadvantages of E-Commerce | The goods can't be handled before buying Customers might not want to disclose personal details on a website Can be expensive to make and maintain a website Employees need to be trained to maintain and update the website |
| Advantages of App | Can use is it on the move |
| Disadvantages of App | Internet connection depends on the location People need to have a smartphone or tablet to access the app Can be expensive to design an app Need to ensure customers can easily use the app |
| Advantages of Text Messaging | Customer receives the message instantly Lots of customers can be targeted Cheaper than some other methods of advertising |
| Disadvantages of Text Messaging | Can only include a small amount of text compared to a website Customers may receive lots of text messages and feel frustrated or annoyed Need to have the mobile phone number of the customer |
| Advantages of E-mail advertising | E-mails can be sent anytime E-mails can be sent to multiple customers at the same time E-mails can be sent worldwide instantly at little cost |
| Disadvantages of E-mail advertising | E-mails may be marked as spam and the customer never sees the e-mail Customer may receive lots of e-mails and feel frustrated or annoyed Employees might need training to write and send out e-mails |
| Advantages of TV advertising | Large audiences can be reached Adverts can be targeted towards specific segments The product can be shown from different angles and a demonstration can be given |
| Disadvantages of TV advertising | Cost of advertising on TV nationally can be high People might not watch the adverts People might not have enough time to take in all the information given as adverts are typically short |
| Advantages of Newspaper/Magazine advertising | Specific location of customers can be targeted Adverts can be kept by readers for reference later Lots of information can be communicated if the advert is large |
| Disadvantages of Newspapers/Magazine advertising | Not all newspapers are in colour No sound, video or demonstration of the product can be given It can be expensive to advertise in certain newspapers and magazines |
| Advantages of Radio advertising | National media reports can reach a large audiences Local radio stations can reach people locally |
| Disadvantages of Radio advertising | People might not have enough time to take in all the information given as adverts are typically short People may tune out during the advert |
| Advantages of Billboard advertising | Advert can be seen many times by potential customers Can promote a business in a specific geographical location Usually in busier locations so more people will see it |
| Disadvantages of Billboard advertising | May be ignored Can only include limited information No demonstrations of the product can be made Only reaches a specific geographical location |
| Special Offers | Providing customers with a discount when they buy a product For example, Buy One Get One Free |
| Free Samples | Small sample sized version of the product so customers can try before they buy |
| Loyalty Cards | Provides loyal customers with discounts or a free product This encourages customers to stay loyal to the business |
| Point of Sale Displays | Designed to make a product look appealing to encourage customers to buy it |
| Celebrity Endorsement | A celebrity is used to promote a business |
| Advantages of Celebrity endorsement | Customers are attracted to a product because it is associated with a celebrity Higher prices can be charged as the product is seen as exclusive Money can be saved on marketing if the celebrity is well known |
| Disadvantages of Celebrity endorsement | Not everyone will like a particular celebrity Company's reputation could be damaged if celebrity gets a bad name Can be expensive to get a celebrity to endorse a product |
| How can a business have a more ethical approach to marketing? | Cutting down on the volume of paper used Not being misleading in the way it presents information in its adverts Complying with discrimination laws and good business practice in its adverts Ensuring its marketing activities do not offend beleifs that di |
| What is market research? | The process of finding out what customers want and what competitors are doing |
| Why is market research conducted? | To make sure they provide goods and services customers want To make sure they keep ahead of the competition |
| What types of market research are there? | Field, Desk |
| Advantages of Field Research | Research has gathered new information and is therefore more up-to-date than existing information Information can be gathered for a specific purpose and is therefore more relevant to the business needs Can only be accessed by the business, competitors ca |
| Disadvantages of Field Research | Collecting information can be expensive - money can't be spent on other things within the business such as advertising or new machinery Time consuming to gather information - could stop decision from being made quickly Staff need to be trained May cont |
| Advantages of Desk Research | It's easy to obtain as it already exists Cheaper than field research and therefore saves the business money Decision can be made quickly |
| Disadvantages of Desk Research | Information may not be as useful or relevant to the business as field research Competitors can access this information Information may be out of date Information may contain bias |
| What is a personal interview? | A survey in which the questions are asked face to face |
| What is a focus group? | A discussion between selected people about a specific good or service, questions are asked with the aim of generating discussion |
| What is a postal survey? | A list of questions is sent to people throught the post, they complete the survey and then send it back to the business |
| What is a telephone survey? | A telephone survey is when people are contacted by telephone and asked to answer questions |
| What is an online survey? | An online survey is when people answer a number of questions that are displayed on a website. |
| What is a hall test? | A hall test involves a product being given to a respondent to try and then asking for their feedback on it. |
| What is an observation? | An observation involves watching something and recording what happens |
| What is an EPOS system? | An electronic point of sale system gathers information when customers are making a purchase at the checkout |
| What is a social networking site? | A social networking site can be used to gain feedback from people on goods and services |
| Advantages of Personal Interviews | The interviewer can encourage and help the respondent to answer questions The interviewer can ask the respondent to clarify a point Body language and facial reactions can be observed |
| Disadvantages of Personal Interviews | It's time consuming and expensive to carry out The interviewer needs to be trained |
| Advantages of Focus Groups | Feelings and views of people can be observed as can their body language Points that are not understood can be clarified |
| Disadvantages of Focus Groups | It's time consuming and expensive to carry out Information can be difficult to analyse Sample of people used may not represent the views of the whole population |
| Advantages of Postal Surveys | It's fairly cheap to send the surveys to large numbers of people spread over a wide geographical area People can complete the survey at their own pace at a time that suits them |
| Disadvantages of Postal Surveys | People might ignore their post and therefore not answer the survey Can take time to get the information back There is no opportunity to clarify anything the respondent doesn't understand The survey must be designed carefully so questions aren't misinte |
| Advantages of Telephone Surveys | Large numbers of people all over the country can be contacted It's less expensive to carry out compared to a personal interview Information is obtained instantly Questions and responses can be clarified |
| Disadvantages of Telephone Surveys | People might not want to participate in a telephone survey, especially if they've been telephoned at an unsuitable time Most people are only willing to answer short surveys so not as much information can be gathered as other methods |
| Advantages of Online Surveys | A link to the survey website can be sent to large numbers of people Do not need to spend money on printing surveys People from all over the world can participate |
| Disadvantages of Online Surveys | Relies on people having an internet connection No personal contact |
| Advantages of Hall Tests | Respondent can report back on their actual experience of the product Relatively cheap to carry out |
| Disadvantages of Hall Tests | Opinions and views can be difficult to analyse The participant might give the response they think the business wants to hear |
| Advantages of Observations | Quantative data is gathered, which is easier to analyse than qualitative data People being observed might not be aware they're being watched so they act naturally |
| Disadvantages of Observations | Those being observed are not usually asked for their opinions or to give an explanation as to why they did or did not do something There are privacy and ethical issues to consider when observing people |
| Advantages of EPOS Systems | Large quantities of information can be gathered The information gathered is factual |
| Disadvantages of EPOS Systems | It can be expensive purchase an EPOS system, especially for smaller businesses No opportunity to gain the opinion of the customer |
| Advantages of Social Networking | A two way interaction occurs between the business and customers Large numbers of people can be reached Questions can be posed to customers very quickly |
| Disadvantages of Social Networking | Customers might not want to join the social networking website of the business Information obtained on the website is not usually private and can be viewed by anyone |
| How can technology be used in marketing? | Websites can be used to advertise items, showing the full range of products or services Databases can be used to store customer information in one place Online surveys can be used to gather information quickly Social media can be used for advertising an |
Created by:
Luca Xiao
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