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Business > 1.3.5 Marketing Strategy > Flashcards

1.3.5 Marketing Strategy Flashcards

1
Q

Niche marketing

A

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants

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2
Q

Mass marketing

A

Where a business sells into the largest part of the market, where there are many similar products offered by competitors

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3
Q

Niche market features

A
  • clear focus
  • low profit margin
  • less competition
  • specialist skills and knowledge
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4
Q

Mass market features

A
  • low unit costs
  • products have broad appeal
  • high profit margin
  • allows heavy promotion
  • caters for all consumers
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5
Q

What is the marketing strategy for mass market?

A
  • selling to people regardless to any segmentation features
  • generic and product marketed in the same way
  • large quantities produced mean lower average costs which maximises EOS resulting in high profits
  • maximise above the line of promotion
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6
Q

What is the marketing strategy for niche markets?

A
  • caters to a small subset of a market segment and will target consumers in a very specific way
  • products have a USP and are designed for a specific purpose
  • marketing tends to be quite tailored - market is small scale so businesses rely on high value of sales
  • customers are price inelastic demand meaning higher prices can be changed due to products being unique
  • media used will be targeted media - specialist magazines, trade fairs, websites
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7
Q

Niche strategies used in marketing

A

product:
-product differentiation
-value added is important to both, but achieved in different way
price:
-premium or skimming
-Influence price through USP and other distinct features
Promotion:
-may rely on more word of mouth and more targeted promotion
place:
-may sell direct or use traditional method
-value added may be achieved through physical location

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8
Q

Mass strategies used in marketing

A

product:
-branding helps differentiate within competitive markets
-value added
price:
-competitive, psychological, loss leader
-mass market brands may have a degree of influence depending on the size or popularity of the brand
promotion:
-rely on above the line methods
-sales promotion

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9
Q

Business to business market

A

where one business sells to another business

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10
Q

Features of B2B

A
  • advertising needs to be informative rather than persuasive or clever
  • focus on cost effectiveness
  • Involve larger transactions
  • suppliers to build up close relationships with customers to try and understand needs
  • offering a quality product and service
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11
Q

Business to customer

A

where a business sells to a consumer

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12
Q

Features of B2C

A
  • consumers need to be convinced that the benefits of a product will meet their needs
  • not looking to build up longterm relationships with the supplier
  • consumers want a variety of distribution channels;s for convenience
  • short message which clearly points out the benefits
  • emotional connection with the product or supplier
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13
Q

B2B marketing strategies

A
  • competitive pricing
  • marketing mix = promotion
  • design mix = function
  • marketing mix = product
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14
Q

B2C marketing strategies

A
  • design mix = aesthetics
  • psychological pricing
  • emotional branding
  • product design carefully follows fashion
  • price skimming
  • use of social media
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15
Q

Product portfolio analysis

A

assesses the position of each product or brand in a firm’s portfolio to help determine the right marketing strategy for each

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16
Q

Product lifecycle

A

a theoretical model which describes the stages a product goes through over its life
-measures in terms of sales and cash flows

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17
Q

What are the stages of the product life cycle?

A
  • introduction
  • growth
  • maturity + saturation
  • deline
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18
Q

Why is cash flow the lowest during the introduction stage?

A
  • just spent lots of money researching and developing product and haven’t had time to recoup that investment
  • sales are low as product is not very unknown
  • lots of money spent on advertising and promotion to try and break into the market
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19
Q 
Research and development stage 
level of sales 
product 
promotion 
distribution 
price 
cashflow
A
  • no sales
  • Innovative new design
  • no promotion
  • no distribution
  • no price
  • negative cashflow
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20
Q 
Introduction 
level of sales 
product 
promotion 
distribution 
price 
cashflow
A
  • low sales
  • new product launched in market
  • heavy promotion to make consumers aware of product
  • may be reluctant to take an unproven product
  • skimming or penetration pricing
  • negative cashflow
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21
Q 
Growth 
level of sales 
product 
promotion 
distribution 
price 
cashflow
A
  • fast growing sales
  • Improve products and its features
  • advertising to promote and increase brand awareness
  • Increase distribution outlets
  • market penetration or price leader
  • positive or negative cash flow
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22
Q 
Maturity and saturation 
level of sales 
product 
promotion 
distribution 
price 
cashflow
A
  • slower sales due to increased competition
  • develop new uses
  • focus on differentiation
  • Intensive distribution
  • price falls
  • positive cash flow
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23
Q 
Decline 
level of sales 
product 
promotion 
distribution 
price 
cashflow
A
  • falling sales
  • failure to innovate and develop
  • aim to retain loyal customers loyalty schemes
  • narrowed distribution
  • price cutting to remain competitive
  • weaker cash flows
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24
Q

Research and development - features

A
  • often complex
  • absorbs significant resources
  • may not be successful
  • may involve long lead time before sales are achieved
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25
Q

Research and development - How is it done?

A
  • time-consuming but CAD is reducing product development times
  • cost of development rises as it approaches launch
  • market research to reduce risk of product failure
  • most new product ideas don’t reach launch phase
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26
Q

Why may new products be scrapped before launch?

A
  • inadequate demand
  • production problem
  • high costs
  • actions of competitors
  • change in external environment
  • doesn’t fit with product range
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27
Q

Introduction stage - features

A
  • new product launched on market
  • low level of sales
  • low capacity utilisation
  • high unit costs
  • usually negative cash flow
  • distributors may be reluctant to take an unproven product
  • heavy promotion to make consumers aware of the product
28
Q

Strategies at the marketing introduction stage

A
  • aim is to encourage customer adoption
  • high promotional spending to create awareness and inform people
  • skimming or penetration pricing
  • limited, focusses distribution
29
Q

Growth stage - features

A
  • expanding market but arrival of competitors
  • fast growing sales
  • rise in capacity utilisation
  • product gains market acceptance
  • unit costs fall due to economies of scale
30
Q

Strategies in the growth stage

A
  • advertising to promote brand awareness
  • Increase in distribution outlets
  • market penetration and price leadership
  • target the early majority of potential buyers
  • continuing high promotional spending
  • Improve product - new feature, improve styling, more options
31
Q

Maturity stage - features

A
  • slower sales growth as rivals enter the market = intense competition and fight for market share
  • high level of capacity utilisation
  • high profits for those with high market share
  • cash flow should be strongly positive
  • prices and profit fall
32
Q

Strategies for mature products

A
  • manage capacity and production
  • promote focusses on differentiation
  • persuasive differentiation
  • persuasive advertising
  • Intensive distribution
  • attract new users
  • repositioning
  • enter new segments
33
Q

Decline stages - features

A
  • falling sales
  • market saturation and competition
  • decline in profits and weaker cash flows
  • more competitors leave the market
  • decline in capacity utilisation - switch capacity to alternative products
34
Q

Strategies for the decline stage

A
  • maintain market share
  • harvest by spending little on marketing the product
  • rationalise by weeding out product variations
  • price cutting to maintain competitiveness
  • promotion to retain loyal customers
  • distribution narrowed
35
Q

Reasons why products enter the decline phase

A
  • technological advance
  • changes in consumer tastes and behaviour
  • Increased competition
  • failure to innovate and develop the product
36
Q

Extension strategies

A

ways in which a business modifies a product to appeal; to more customers and maintain sales in maturity and delay decline

37
Q

Aims of extension strategies

A
  • extend maturity
  • Increase sales
  • differentiate product not new product
  • appeal to a new segment
38
Q

Promotional extension strategies

A
  • change the image
  • change packaging
  • reduce price/discounting
  • change the advert campaign
  • target a new segment
  • Increase usage
  • change the name
39
Q

Product extension strategies

A
  • change the size
  • moderated/improved product
  • new use for product
40
Q

What is the use of the product life cycle?

A
  • forecast future sale trends - helps marketing budget and help assess demand
  • help with market targeting and positioning
  • help to analyse and manage the product portfolio
  • when to invest in marketing
  • what cash flow is like
  • decision making
41
Q

Weaknesses of the product life cycle model

A
  • the shape and duration of the cycle varies from product to product
  • strategic decisions can change the life cycle - can cause product to move into stage through marketing managers decisions not naturally (determinism) - moves quicker than it may have
  • It is difficult to recognise exactly where a product is in its life cycle
  • decline is not inevitable
  • doesn’t consider any other external factors
  • length cannot be reliably predicted
42
Q

The boston matrix

A

a tool to analyse a products share and growth within a market

43
Q

What are the axes of boston matrix?

A
  • relative market share

- market growth

44
Q

x axis of the boston matrix

A

Relative market share

  • In relation to other firms in the market
  • a measure of the products strength in the market
45
Q

y axis of the boston matrix

A

market growth

  • % rate of growth of sales in the market
  • measure of market attractiveness
46
Q

Question market or problem child products

A
  • low share of rapidly growing market
  • cash flow is negative due to low demand and fierce competition
  • have potential but future is uncertain
  • need heavy promotion
  • could become either a star or a dog
47
Q

Strategy for question markets

A

-invest to increase market share
-substantial investment to achieve growth at the expense of powerful competitors
-Invest in promotion or other aspects of marketing
-build selectively
BUILIDING

48
Q

Star products

A
  • high share of a rapidly growing market
  • fierce competition
  • position of leadership in a high growth market
  • product is relatively strong and market is growing
  • require high market spending
  • net cash inflow is neutral or at best modestly positive
49
Q

Strategy for star products

A

-invest to sustain growth
-build sales/ market share
-spend to keep competitors at bay
-Invest to maintain or increase leadership position
-repel challenges from competitors
-heavy promotion
HOLDING

50
Q

Cash cow products

A
  • high share price of a slowly growing market
  • mature stage in product life cycle
  • mature, successful product
  • dominant share
  • little potential for growth
  • large positive cash inflow
  • little threat from competition
  • established products
51
Q

Strategy for cash flows

A
  • defend market share
  • aim for short term profits
  • little need for investment
  • little potential for further growth
  • reduce investment in order to maximise short term cash flow and profits
  • use profits from cash cows to invest in new products
52
Q

Dog products

A
  • either products that have failed or products that are in the decline phase of their life cycle
  • low share of a slow growth market
  • not going anywhere, no real potential
53
Q

Strategy for dog products

A
  • phase cut or sell off (divest)
  • not worth investment
  • any profit made has to be re-invested just to maintain marketshare
  • uses up more management time and resources than needed
  • divest or focus on a defendable niche
54
Q

Boston matrix compared to product life cycle

A

TBM
-Is concerned with the firm’s portfolio of products
-focuses on cash flow from products
PLC
-Is concerned with with individual products
-sales over time

55
Q

Benefit of the boston matrix

A
  • a useful tool for analysing product portfolio decisions

- compare product with one performance to another

56
Q

Drawbacks of the boston matrix

A
  • only a snapshot of the current position - things can change all the time particularly in dynamic markets
  • can’t use to forecast, no predictive value
  • focusses on market share and market growth ignores issues such as developing a sustainable competitive advantages - one that is going to last
57
Q

How is customer loyalty is developed?

A

marketing strategy and customer loyalty

58
Q

Marketing strategy

A
  • the methods chosen to achieve marketing objectives

- related to pricing, product, promotion and place

59
Q

Customer strategy

A

-means a preference for a product or brand, based on experience and emotional attachment, which inclines buyers to repeat purchase away from rivals

60
Q

Methods of customer strategy

A
  • loyalty schemes, cards

- saver schemes

61
Q

What are the three main ways that a business tries to build customer loyalty?

A
  • customer service
  • physical environment
  • loyalty schemes
62
Q

What are the three main ways that a business tries to build customer loyalty? - customer service

A
  • employees involved in dealing with customers before, during and after a sale
  • customer service is extremely important in today’s service sector
  • staff must be appropriately trained, motivated and show good communication and interpersonal skills when dealing with customers
  • people are an important aspect of all business, they are the ones interacting with customers
63
Q

What are the three main ways that a business tries to build customer loyalty? - physical environment

A
  • the design and features of the actual place where a transition takes place
  • can directly influence the customers shopping experience and therefore their level of satisfaction as well as willingness to return
64
Q

What are the three main ways that a business tries to build customer loyalty? - aspects of physical environment

A
  • cleanliness
  • aesthetically pleasing
  • facilities
  • ambience
  • design - ease of movement around premises or ability to find what you’re looking for
65
Q

What are the three main ways that a business tries to build customer loyalty? - loyalty schemes

A

-reward cards - collect points, stamps for a free product
-saver schemes
Loyalty cards
-focusses on incentivising purchases by reward spending
e.g. odeon premiere club, tesco clubcard

Business (64 decks)

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