* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Comment - Anketell Training
Bayesian inference in marketing wikipedia , lookup
Social media marketing wikipedia , lookup
Affiliate marketing wikipedia , lookup
Planned obsolescence wikipedia , lookup
Sales process engineering wikipedia , lookup
Service parts pricing wikipedia , lookup
Dumping (pricing policy) wikipedia , lookup
Price discrimination wikipedia , lookup
Perfect competition wikipedia , lookup
First-mover advantage wikipedia , lookup
Ambush marketing wikipedia , lookup
Product placement wikipedia , lookup
Product lifecycle wikipedia , lookup
Neuromarketing wikipedia , lookup
Marketing communications wikipedia , lookup
Market penetration wikipedia , lookup
Marketing research wikipedia , lookup
Digital marketing wikipedia , lookup
Food marketing wikipedia , lookup
Predictive engineering analytics wikipedia , lookup
Sports marketing wikipedia , lookup
Target audience wikipedia , lookup
Multi-level marketing wikipedia , lookup
Viral marketing wikipedia , lookup
Guerrilla marketing wikipedia , lookup
Youth marketing wikipedia , lookup
Direct marketing wikipedia , lookup
Integrated marketing communications wikipedia , lookup
Pricing strategies wikipedia , lookup
Marketing plan wikipedia , lookup
Street marketing wikipedia , lookup
Target market wikipedia , lookup
Multicultural marketing wikipedia , lookup
Green marketing wikipedia , lookup
Sensory branding wikipedia , lookup
Advertising campaign wikipedia , lookup
Marketing mix modeling wikipedia , lookup
Marketing channel wikipedia , lookup
Global marketing wikipedia , lookup
Edexcel Business Studies A level Unit 2a Revision Pack, 2012 Unit 2a Managing the Business more resources for this course from anketelltraining.com 1. 2. 3. 4. How to revise Use your own notes as your basis for revision. I have used a number of examples in this pack that you would not be expected to know about. The syllabus does not require that you learn any specific examples. If you don’t understand any of the concepts, use your own notes, or textbooks, or teachers, or friends to improve your understanding. Don’t forget that knowledge of the concepts is only part of what you are tested on. Application, Analysis and Evaluation are all equally important. The comments given in this pack provide some examples of how the basic content might be extended to provide application and analysis. 2.3.1a Marketing plan This section of Unit 2a looks at how businesses go about moving goods and services from the initial concept to the final customer – in other words, the process of marketing. Marketing involves everything you do to get your potential customers and your goods or services together. The specification covers the following sub-sections: 1. Marketing objectives and strategy 2. Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) 3. Price elasticity of demand 2.3.1a(1) Marketing objectives and strategy Q1: What are the typical marketing objectives of a business? A: A target level of sales, or profits. Comment: As has been said, “funny how it always seems to come down to sales”. A business may have a range of targets, possibly an upper case, mid-case and lower-case target. Then the overall target may be split up into regional targets, and/or targets for each product line. 2.3.1a(1) Marketing objectives and strategy Q2: On what basis may marketing objectives be set for existing businesses? A: On the basis of market research, whether primary or secondary or both. Comment: For existing businesses, secondary research will be based around existing sales levels, and primary research may well focus on finding out what those existing customers think of new product ideas. 2.3.1a(1) Marketing objectives and strategy Q3: On what basis may marketing objectives be set for new businesses? A: Again, on the basis of market research, whether primary or secondary or both. Comment: For new businesses, secondary research will use publicly available sources to estimate market potential. However, the personal knowledge and contacts of the entrepreneur (i.e. ‘qualitative research’) are likely to be just as important. 2.3.1a(1) Marketing objectives and strategy Q.4 What is the difference between niche marketing and mass marketing? A: Niche marketing refers to the targeting your goods or services at one small segment of potential customers, while mass marketing is aimed at a much larger population. Comment: The two types of marketing overlap: there is no single agreed size at which a niche market becomes a mass market. 2.3.1a(1) Marketing objectives and strategy Q5: What are the benefits of using a niche marketing strategy? A: Marketing costs are low, and it is easy to establish a point of difference with respect to competitors. Comment: For these reasons, market entry using a niche strategy is the only realistic way into a market for a new entrepreneur with limited experience and capital, e.g. Face Book was at first targeted only at Harvard University students. 2.3.1a(1) Marketing objectives and strategy Q6: What are the main limitations of using a niche marketing strategy? A: Unless the new business can grow rapidly before competitors copy its good ideas, then sales and profits are limited by the small size of the market. Comment: Entering a market using a niche strategy gives rivals time to respond to your presence before you become a major threat. 2.3.1a(1) Marketing objectives and strategy Q7: What are the main benefits of using a mass marketing strategy? A: Unit costs are low, enabling you to sell products cheaply. Additionally, the high total costs of mass marketing act as an entry barrier to potential competitors. Comment: Companies which uses mass marketing techniques are almost certain to be large. 2.3.1a(1) Marketing objectives and strategy Q8: What are the main limitations of using a mass marketing strategy? A: Mass marketing tends to be impersonal, and the degree of consumer loyalty established may therefore be weak. Comment: We have seen since the 2008-09 recession how a number of famous High Street brands have folded, as shoppers have switched to Internet brands for greater convenience. 2.3.1a(1) Marketing objectives and strategy Q9: Under what circumstances might it make sense to grow a business from serving a niche market to serving a mass market? A: When the business has already shown itself to be successful on a small scale, and there is no reason why it could not be scaled up. Comment: In some circumstances it may be possible to grow incrementally, one sale at a time. In other circumstances it may be necessary to commit to growth by making a major financial investment, such as building a new factory or buying up another company. 2.3.1a(1) Marketing objectives and strategy Q 10: How, practically, could a business expand from supplying a niche market to supplying a mass market? A: If the niche market is already profitable (or shows signs that it will be), then it should be relatively easy to raise the finance for expansion. Comment: Whether the entrepreneur wishes to expand in this way is another matter. The expansion itself will carry risks, and the lifestyle of the entrepreneur may change out of all recognition. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q11. What is meant by ‘product’ in the marketing mix? A: The characteristics of the product, i.e. its uses, technical characteristics, and market positioning. Also important is the range of products available, known as the product mix. Comment: The brand image of a product becomes, for many, an essential characteristic of that product. Brand image, therefore, is both part of the ‘product’ and part of ‘promotion’ in the marketing mix. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q12: What is meant by ‘price’ in the marketing mix? A: The pricing strategy which is adopted, and particularly whether the business model is low volume with a high price (and high gross margin), or high volume with a low price (and low gross margin). Comment: Typically, firms adopting niche marketing strategies will have high prices and low volumes, while the mass market approach is associated with low prices and high volumes. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q13: What is meant by ‘promotion’ in the marketing mix? A: The advertising, packaging and sales promotion which are used to build up a brand image. Comment: Sales promotion includes money-off vouchers, two-for-one offers, competitions and free samples. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q14: What is meant by ‘place’ in the marketing mix? A: The channel of distribution which is used to put the good or service in the hands of the final customer. Comment: This is as important as the other elements of the marketing mix. The current seismic shift from High Street sales to on-line, internet sales represents a once-in-a-lifetime change in the channels of distribution. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q15: If a company produces a high quality product, what implications does this have for its pricing and promotion strategies? A: High quality products are normally more expensive to produce, and therefore have to be priced highly. They therefore require considerable promotional expenditure to justify the high price, leading to an additional cost which also has to be factored into the price. Comment: Customers who buy luxury products pay twice over. They pay for the luxury – and for being told about the luxury. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q16: If a company wishes to compete on price, what implications does this have for product quality, and promotional expenditure? A: Product quality will probably not be of the highest – the emphasis will be on ‘value’. And to make any profit, either promotional expenditure will be close to zero, or sales volumes must be very high to make up for the low profit margin. Comment: For example, street traders normally spend nothing on marketing, and product quality will be at the lower end. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q17: To what extent does the widespread adoption of the internet alter the available channels of distribution? A: For many companies, it has (or has the capacity to) alter fundamentally their business model. Comment: For example, the internet creates new niche markets by bringing together geographically-dispersed groups of customers with minority interests. And for most companies, it reduces the costs of distribution. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q18: What does the product life cycle measure? A: The way in which sales volumes of a product change over time. Comment: The time period could be anything from a few months for a fashion item, to a few centuries for something of enduring value like a classical work of literature. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q19: What are the four stages in the product life cycle? A: Birth (also known as Introduction or Launch), Growth, Maturity, Decline. Comment: This is best viewed as the life cycle of a successful product. Many new product ideas never make it to their introduction (i.e. their launch). And many of those that do fail to experience sales growth, and are quickly discarded. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q20: Is the product life cycle a description of the sales pattern of a generic product (e.g. laptops), or of a particular branded product (e.g. the Dell Inspiron XPS 15)? A: Both. Generic products will, of course, have longer life cycles than specific branded products. Comment: Companies need to reinvent their product portfolios continually. Both the individual branded products, and the wider product categories will decline eventually. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q21: What processes must take place before a new product in launched? A: The new product must be designed and tested, and market research carried out to establish its commercial viability. Comment: These processes are often carried out in secret, so that competitors cannot respond, and so that the launch itself generates additional interest among journalists and the general public. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q22: Why do many new products experience a growth in sales levels after their launch? A: Those who like it the most will be the ‘first adopters’, and as the product becomes more widely used so its increased credibility and brand recognition encourages others to buy it too. Comment: For many products, the growth phase is relatively short. A successful new song (or book) will see sales peak within days or weeks, followed by a relatively long decline. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q23: What accounts for the ‘maturity’ phase of many products? A: Fast-moving consumer goods (FMCG), such as a new brand of toothpaste, will be repeatedly purchased by a core group of customers. More expensive goods, like a new car model, will be purchased by different people each year as their existing cars need replacing in different years. Comment: Schools fall into this last category, with many school ‘brands’ lasting centuries. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q24: What accounts for the ‘decline’ phase? A: Often products succumb to competitors, who produce more strongly branded (or more technologically advanced) substitutes. Sometimes most of the potential customers have already bought it and there is no reason for them to buy again – a situation known as ‘saturation’. The company may then deliberately phase the product out to encourage existing customers to buy the new version, for example, makers of golf clubs. Comment: In the case of fashion goods, decline is built into the whole concept of buying ‘the latest’. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q25: Is decline inevitable for all products? A: No. Some generic products, like a loaf of bread, have endured for thousands of years. Some famous consumer brands, like Marmite, Ovaltine and Heinz ketchup are into their second century. Comment: Such long-lasting brands have to be continually reinvented. While the historic links are carefully guarded, details such as the packaging and the precise formula of the products are changed gradually at regular intervals. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q26: What are the financial implications of the product life cycle? A: The vast majority of products will decline and die sooner rather than later. Profits from existing, successful products must be reinvested in the development of their replacements. Comment: Not every new product will succeed. So the profits from one successful product may have to support the development of several new ones. 2.3.1a(2) Identification of marketing mix (4 Ps – Product, Price, Promotion, Place) Q27: What are the cash flow implications of the product life cycle? A: During the development phase and up to (and including) the launch, cash flow will be negative. Only if sales hit break-even will cash flow then turn positive. It should then remain positive through all the further stages of growth, maturity and decline. When cash flow turns negative, the product will be withdrawn, unless there is a strategic reason for keeping it going. Comment: A strategic reason might be to hinder a rival from launching a similar product, and/or continue to offer a complete product range until a substitute in the development pipeline is ready for launch.