Combination "Marketing" Topic: 4.1-4.9

Cost-Plus Pricing
Adding a fixed mark-up for profit to the unit price of a product
Competition-Based Pricing
A firm will base its price upon the price set by its competitors
Price Leadership
One dominant firm in a market sets a price and other firms simply charge a price based upon that set by the market leader.
Predatory Pricing
Deliberately undercutting competitors’ prices in order to try and force them out of the market
Penetration Pricing
Setting a relatively low price often supported by a strong promotion in order to achieve a high volume of sales
Skimming
Setting a high price for a new product when a firm has a UNIQUE or HIGHLY DIFFERENTIATED product with low price elasticity of demand
Loss Leader
an aggressive pricing strategy in which a store sells selected goods below cost in order to attract customers who will (hopefully) make up for the losses on highlighted products with additional purchases of profitable goods.
Psychological Pricing
Setting prices that take account of customers’ perception of value of the product
Promotional Pricing
Special low prices to gain market share or sell off excess stock – includes ‘buy one get one free’
Cost-Based Pricing
Setting prices based on the COSTS OF PRODUCTION rather than the level of demand or the prices set by competitors
Demand
The amount of products that customers are willing and able to buy at each price. For the vast majority of products, as the price increases, demand will fall
Price Discrimination
A pricing strategy that involves charging different prices to different groups of customers for the same product (e.g. child and adult fares at the cinema and on flights)
Price War
Firms compete by a series of intensive price cuts
Boston Matrix
Is a tool for analysing the product portfolio of a business. It measures whether products have a high or low MARKET SHARE and operate in HIGH or LOW GROWTH industries.
Brand development
Is a long-term product strategy that involves strengthening the name and image of a brand in order to boost its sales.
Brand extension
Refers to the use of an existing reputable brand name to launch a new or modified product
Branding
Refers to the use of an exclusive name, symbol or design to identify a specific product or business. It is used to differentiate itself from similar products used by rival firms.
*Cash cow* in BCG Matrix
Is a term used by the BCG Matrix to refer to any product that generates significant sales revenue due to its large market share in a slowly expanding or mature market.
Consumer goods
Are items bought by the final user for their own personal consumption. Examples include CONSUMER DURABLES (such as furniture, computers and cars) and PERISHABLES (such as flowers and food)
Differentiation
Refers to any strategy used to make a product appear to be dissimilar from others. Examples include quality, branding and packaging.
Product differentiation
Refers to any strategy used to make a product appear to be dissimilar from others. Examples include quality, branding and packaging.
Extension strategy
Is an attempt by marketers to lengthen the product life cycle of a particular product. Such strategies are typically used during the maturity or early decline stages of a product’s life cycle.
Generic brands
Are trademarks that have become synonymous with the name of the product/service itself. Examples include Coke, Rollerblade, Google and Frisbee.
Marketing myopia
Refers to the short-sightedness and complacency of marketers in adapting to changes in the market place. This may be especially true of product-oriented businesses.
Product
A broad term that refers to any physical or non physical item that is purchased by either commercial or private customers.
Product line
Describes the varieties of of a particular product that serves the same purpose in a particular market. For example there are many different varieties of the BMW Mini, ranging from the basic model to the top of the range Mini Cooper S.
Product mix
Describes the variety of different product lines that a business produces. BMW produces a line of high performance sedans, a line of SUVs, a line of compact cars, etc.
Product life cycle
Is the typical process that products go through from their initial R & D and launch to their decline and withdrawal from the market.
Stages of the product life cycle
R & D. Launch/Introduction. Growth. Maturity. (Saturation). Decline.
Product portfolio
The range of products or strategic business units owned and developed by an organisation.
Product range
All product lines of a firm’s product mix; i.e. all the products sold by the business.
Brand
An exclusive name, symbol or design used to identify a specific product or business.
Extension strategies and the product life cycle
– Price reductions
– Redesigning
– Repackaging
– New markets
– Brand extension
*Price reductions* – PLC extension strategy
Lowering prices increase the demand for a product. Discounting can help a firm get rid of excess stocks of those products in danger of becoming obsolete.
*Redesigning* – PLC extension strategy
This may involving the introduction of special features, or releasing limited editions of a product. All of which may add value in a customer’s perception of a product.
*Repackaging* – PLC extension strategy
The appearance of a product can significantly affect demand. Changing the appearance of the product’s packaging – more attractive materials and colours – can increase demand.
*New Markets* – PLC extension strategy
Entering a new market with an existing market can extend the life of a product. This could involve a new export market or even just having the product being stocked with a new retailer.
*Brand extension* – PLC extension strategy
Building on a brand’s success to launch a new or existing version of a pproduct
*Dogs* in the BCG matrix
Products with low market share in a low growth market. Firms need to use a product extension strategy or dispose of these products altogether.
*Stars* in the BCG matrix
Products with high market share in a high growth market. As the market grows, develops and matures, a ‘star’ product could become the next ‘cash cow’ for a business.
*Question marks (problem children)* in the BCG matrix
Products with low market share in a high growth market. Considerable investment in these products may be needed to capture more market share from competitors and turn them into ‘stars’.
Advantages of successful branding
1. Price advantages
2. Recognition and loyalty
3. Distribution advantages
Price advantages
Firms that’s sell undifferentiated products that have a variety of substitutes tend to compete on price and find it difficult to charge higher prices than their rivals.
Distribution advantages
The best brands are more likely to be stocked in retail outlets, given better store locations, and shelf positions. A good brand will enable the product to ‘fly off the shelf’!
Brand awareness
Measures the extent to which a particular brand is recognised amongst potential customers or the general public. It is usually measured as a percentage; e.g., if 999 out of 1000 people surveyed recognise the brand Coke®, then Coke’s brand awareness is 99.9 per cent.
Brand loyalty
The faithfulness of consumers to a particular brand as shown by their repeat purchases irrespective of the marketing pressure from competing brands.
Brand value
The premium that accrues to a brand from customers who are willing to pay extra for it.
Packaging
Packaging in marketing concerns itself with the presentation of a product to a consumer.
4 Functions of packaging
1. Customer perceptions
2. Product differentiation
3. Protection
4. Information
Channel of distribution
The chain of intermediaries a product passes through from producer to consumer
Agent
Business with authority to act on behalf of another firm; e.g. to market its products
Broker
A wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation
Supply chain management
The process of managing the network of businesses that are involved in the provision of products to the final consumer
Direct mail
Promotional material sent directly to people’s homes or place of work
Direct marketing
Any promotional activity that involves making direct contact with existing or potential customers, such as door-to-door selling, personal selling and direct mail
Distribution
The process of getting products/services to customers at the right time and in the most cost-effective way; it is the PLACE in the marketing mix
Distributors
Are independent businesses that act as intermediaries by specialising in the trade of products made by certain manufacturers
Intermediaries
Agents or firms that act as a “middle man” in the chain of distribution between the producers and consumers of a product
Telemarketing
The use of telephone systems (calls and messaging) to sell products directly to consumers
Retailers
The sellers of products to the general public (i.e. consumers) that operate in outlets
Wholesalers
Businesses that purchase large quantities of products from a manufacturer and then separate or ‘break’ the bulk purchases into smaller units for resale to retailers
Promotion
The use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorship and public relations to inform consumers and persuade consumers to buy
Above-the-Line Promotion
A form of promotion that is undertaken by a business by paying for communication with consumers; e.g. advertising
Below-the-Line Promotion
Promotion that is not a directly paid-for means of communication but based on short-term incentives to purchase
Promotion Mix
The combination of promotional techniques that a firm uses to communicate the benefits of its products to customers
Advertising
A method of informative and/or persuasive promotion that has to be paid for. The ultimate aim of advertising is to raise the level of demand for a firm’s products.
Personal Selling
A form of promotional technique that relies on keen and knowledgeable sales staff directly helping and persuading customers to make a purchase
Publicity
The process of promoting a business and its products by getting media coverage without directly paying for it
Sales Promotion
A short-term incentive designed to stimulate sales of a product; e.g. discount coupons, prize draws, trade fairs and free product samples
Sponsorship
A promotional technique which involves a business funding, supporting or donating resources for an event or business venture in return for prominent publicity
Word of Mouth (WOM)
The spreading of good or bad messages about a firm, its products or its customer service. Many people argue that this is the most cost-effective form of promotion
Guerrilla marketing
an advertisement strategy concept designed for businesses to promote their products or services in an unconventional way with little budget to spend
Marketing
The management task that links the business to the customer by identifying and meeting the needs of customers profitably.
Market Leaders
Are firms that dominate the market share in a particular market. The business that has the largest market share in an industry, as measured by value or volume of sales.
Market Orientation
Is an approach adopted by businesses that are outward looking. They focus on making products that they can sell, rather than trying to sell products they can make.
Market Share
Measures the value of a firm’s sales revenue as a percentage of the industry’s total; e.g. a business with 35% means that for every $100 sold in the industry, the firm earns $35 of the sales revenue.
Marketing Audit
A review of the firm’s current marketing mix, in terms of its strengths, weaknesses, opportunities and threats.
Marketing Mix
The main elements of a firm’s marketing strategy: PRODUCT, PRICE, PROMOTION & PLACE.
Marketing Plan
The document outlining a firm’s marketing objectives and strategies for a specified time period.
Marketing Strategy
Any medium-to long-term plan for achieving the marketing objectives of a business.
Product Orientation
A marketing approach adopted by businesses that are inward looking. They focus on selling products they can make, rather than making products they can sell.
Social Marketing
Any activity that seeks to influence social behaviour to benefit the target audience and society as a whole.
It does NOT mean social media.
Consumer Markets
Markets for goods and services bought by the final user of them.
Industrial Markets
Markets for goods and services bought by businesses to be used in the production process of other products.
Market Size
The total level of sales of all producers within a market.
Market Growth
The percentage change in the total size of a market (volume or value) over a period of time.
Marketing mix
*Product*: making sure that the right products are supplied to meet the needs and wants of consumers.
*Price*: Establishing the correct price to balance the needs and wants of consumers with the objectives of the firm (e.g., profit maximisation, maximising market share.)
*Place*: Finding the right distribution channels to get products into the hands of customers.
*Promotion*: Informing customers and potential customers about the product and persuading them to take action (i.e. buy the product).
The *benefits* of being the *market leader* with highest market share include:
1. Sales are higher than those of any competing business
2. Retailers will be keen to stock and promote the bestselling brands
3. Can be used in advertising and other promotional material
4. Consumers are often keen to buy the most popular brands
Characteristics of markets:
1. Market size
2. Customer base
3. Barriers to entry
4. Competition
5. Market growth rate
6. Demographics
Market
A market is a place or a process where suppliers and customers can buy and sell goods and services .
Marketing *objectives* of *non-profits*:
1. Building membership support and connections with new donor clients
2. Raising the profile of the cause being championed
3. Brand awareness and positive information about activities being engaged in
Marketing objectives
The goals set for the marketing department to help the business achieve its overall objectives.
Marketing strategy
Long-term plan established for achieving marketing objectives.
Examples of marketing objectives:
1. Increasing market share – perhaps to gain market leadership
2. Increasing brand awareness
3. Increasing total sales levels – either in terms of volume or sales value
4. Development of new markets for existing products to spread risks.
Sales forecasting
A quantitative technique that attempts to estimate the level of sales a business expects to achieve, over a given time period.
Seasonal variations
Regular and repeated variations that occur in sales data during certain times of year and fewer than 12 months in length.
Random variations
May occur at any time and will cause unusual and unpredictable sales figures; e.g. exceptionally poor weather, or negative public image following a high-profile product failure.
Trend
Underlying movement of the data in a time series.
Moving-Average Method
The simplest method of time-series forecasting; assumes that the time series has only a level component plus a random component.
*Advantages* of *Moving-Average Method* of sales forecasting
1. Useful for identifying and applying the seasonal variation to predictions.
2. Reasonably accurate for short-term forecasts in reasonably stable economic conditions.
3. Planning for each quarter in future.
*Disadvantages* of *Moving-Average Method* of sales forecasting
1. Fairly complex calculation.
2. Forecasts further into the future become less accurate as the projections made are entirely based on past data
3. Forecasting for the longer term may require the use of more qualitative methods that are less dependent on past results.
Correlation
shows the degree to which two sets of numbers or variables are related, e.g. sales revenue over a period of time. Marketers are interested in establishing a strong correlation between marketing expenditure and sales growth. (Higher Level)
Cyclical variations
are recurrent fluctuations in sales linked to the economic cycle of booms and slumps. Unlike seasons variations, cyclical variations can last longer than a year. (Higher Level)
Extrapolation
is a forecasting technique used to identify the trend by using past data and extending this trend to predict future sales. (Higher Level)
Moving averages
are used to find underlying trends by smoothing out variations in a data set caused by seasonal, cyclical and random variations. It is common to use up to four-part moving averages, i.e. averaging sales figures for four consecutive-time periods. (Higher Level)
Time series analysis
is a sales forecasting technique that attempts to predict sales levels by identifying the underlying trend from a sequence of actual sales figures. (Higher Level)
Customer Relations Management (CRM)
Refers to the use of people in the marketing mix. CRM focusses on what can be gained during the lifetime of a positive relationship with customers.
Ethical marketing
The moral aspects of a firm’s marketing strategies. It can be encouraged by the use of moral codes of practice.
Marketing audit
A systematic examination and review of the current position of a firm in terms of its strengths and weaknesses.
Marketing mix
The four main elements of marketing strategies: PRODUCT, PRICE, PROMOTION and PLACE. (The 4Ps)
Packaging
The eighth ‘P’ in the marketing mix which focuses on the ways in which a product is presented to the consumer.
Physical evidence
The image portrayed by a business (or perceived by customers) regarding its observable and tangible features such as the cleanliness and physical size of a business or the presentation of its staff.
Position map
A visual aid that shows customers’ perception of a product or brand in relation to others in the market.
Primary research
Involves data being collected by the researcher since the dtaa does not currently exist.
Process
Part of the extended marketing mix which refers to the methods and procedures used to give clients the best possible customer experience.
Repositioning
A strategy that involves changing the market’s perception of a product or brand relative to those offered by rival firms.
Sampling
The practice of selecting a representative group (known as the sample) of a population for primary research purposes.
Segmentation
The process of categorising customers into distinct groups of people with similar characteristics (such as age or gender), and similar wants or needs for research and targeting purposes.
Targeting
Each distinctive market segment will have its own marketing mix. Different markets can also be targeted, depending on whether they operate in niche, differentiated or mass markets.
Unique Selling Point (USP)
Any aspect of a product that makes it stand out from those offered by rival businesses.
Coordinated marketing mix
Key market decisions complement each other and work together to give customers a consistent message about the product.
Marketing objectives
The goals set for the marketing department to help the business achieve its overall objectives.
Marketing strategy
A long term plan established for meeting marketing objectives.
Test marketing
Marketing a new product in a geographical region before the full scale launch.
Market segment
A sub-group of a whole market in which consumers have similar characteristics.
Market segmentation
Identifying different segments within a market and targeting different products or services to them.
Consumer profile
A quantified picture of consumers of a firm’s products, showing proportions of age groups, income levels, location, gender and social class.
Target market
The market segment that a particular product is aimed at.
Corporate image
Consumer perception of a company behind a brand.
International Marketing
Selling products in markets other than the original domestic market
Pan-Global Marketing
Adopting a standardised product across the globe as if the whole world were a single market – selling the same good in the same way everywhere
Global Localisation
Adapting the marketing mix, including differentiated products, to meet national and regional tastes and cultures
Global marketing
Adopting a standardised product across the globe as if the whole world were a single market – selling the same good in the same way everywhere
Business etiquette
The manner, social and cultural context in which business is conducted. International etiquette differs from one country to another so it is important for marketers to be aware of the different protocols that exist
Exporting
The practice of selling domestically produced goods and /or services to overseas buyers to gain access to international markets
Direct Investment
A business setting up a production and/or distribution facilities in foreign countries
E-Commerce
Trading via the internet
Joint Ventures
When two or more companies invest in a shared business project, pooling their resources to form a SEPARATE BUSINESS. The companies retain their separate legal identities but share the risks and returns from the joint venture
Strategic Alliances
When two or more businesses pool their human, capital and financial resources in a SHARED PROJECT. They DO NOT form a new business with a separate legal identity
Franchising
A business allowing others to trade under its name in return for a fee and a share of the profits
Mergers
Two businesses (occasionally more) agree to integrate as a single organisation.
Acquisitions
This is when another business buys out another by purchasing a majority stake in the target company
Takeovers
This is when another business buys out another by purchasing a majority stake in the target company
Economies of Scale
Reductions in a firm’s unit (average) costs of production that result in an increase in the scale of operations; i.e. by producing more
E-Commerce
The buying and selling of goods and services on the internet
Viral Marketing
The use of social networking sites or SMS text messages to increase brand awareness or sell products
B2B
Stands for business-to-business and refers to online trade conducted directly for the BUSINESS CUSTOMER rather than the end-user; an example would be Amazon.com supplying books to other book retailers
B2C
Stands for business-to-consumer and refers to online business conducted directly for consumers;p an example would be Amazon.com selling books directly to private individuals
C2C
Consumer-to-Consumer marketing takes place between consumers on an e-commerce platform such as eBay. Consumers are directly buying and selling to each other.
Clicks and Mortar
Refers to businesses that combine the traditional main-street existence with an online presence. By contrast, other businesses may have just an online presence (e.g. Zappos.com)
E-tailers
Are businesses that operate predominately online (e.g. Zappos.com). They are different to retailers that operate physical stores in shopping malls and other physical outlets
Online Presence
A business has a dedicated website for e-commerce. This could be limited to providing information about the business and its products,and may extend to selling products online.
Spam
Unwanted e-mail (usually of a commercial nature sent out in bulk)
Search Engines
Find web pages related to your request; e.g. Google, Bing and Yahoo!
SEO
Search Engine Optimisation
Search Engine Optimization
A systematic process of ensuring that a firm comes up at or near the top of lists of typical search phrases related to that business
Price Transparency
The ease with which consumers can find out the variety of prices in a market
Market research
The range of marketing activities designed to discover the opinions, beliefs and feelings of potential and existing customers to identify and anticipate the needs and wants of customers.
Primary research
Involves data being collected by the researcher since the dtaa does not currently exist.
Qualitative research
Focusses on the comments, suggestions and opinions of respondents. Qualitative research data are not statistical but can generate in-depth findings.
Quantitative research
Focusses on the collection and interpretation of statistical and numerical data for market research purposes.
Quota sample
A sampling method that involves segmenting the population and then selecting a certain number (the quota) in each market segment.
Random sample
A sampling method that gives every person in the population an equal chance of being selected.
Sampling
The practice of selecting a representative group (known as the sample) of a population for primary research purposes.
Secondary research
Using data and information that has already been collected by another party; i.e. the data or information already exists.
Test marketing
Marketing a new product in a geographical region before the full scale launch.
Sampling error
Errors in research caused by using a sample for data collection rather than the whole target population.
Stratified sampling
Draws a sample from a specified sub-group or segment of the population and uses random sampling to select an appropriate number from each stratum.
Cluster sampling
Using one or a number of specific groups to draw samples from and not selecting the whole population; e.g. using one region or town.
Quota sampling
Gathering data from a group chosen out of a specific sub-group; e.g. a researcher may ask 100 individuals between the ages of 20 and 30 years.
Snowball sampling
Using existing members of a sample study group to recruit further participants through their acquaintances.
Consumer profile
A quantified picture of consumers of a firm’s products, showing proportions of age groups, income levels, location, gender and social class.
Non-sampling errors
Occur during the course of the survey activities, rather than from the survey itself. Such as response bias, data entry error, undercoverage etc.
Population
The entire set of items from which a sample is drawn; i.e. all potential customers of a particular market,