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BUSINESS STUDIES MARKETING REVISION Activity Comprehension 1 Marketing provides consumers with choice. Identify two methods used by business to do this. 2 Describe the importance of market share to a business operating in a highly competitive environment. Diagram 1 Create a diagram that outlines the role of each key business function 2 In each section, identify how the key business function is interdependent with marketing. Activity Comprehension 1 Explain why businesses may benefit from using the production approach. 2 Outline the importance of promotion to the selling approach. Activity Classification Identify the types of markets in which the following business transactions occur: a A mining company has discovered iron ore deposits in Queensland. b A motor vehicle production company uses tyres produced by Kuma Runer automotive. c A bread manufacturer has released a type of bread that appeals to a variety of consumers. d An electronic store sells a range of television brands, including Panasonic, Samsung and LG. e A jeweller specialising in bridal jewellery. f A TV station believes its niche market to be males aged 40 years and over interested in sport. Chapter revision task Multiple-choice questions 1 How may marketing best be defined? (A) The process of developing promotional and pricing strategies to sell a product (B) The process by which a business attempts to raise awareness of the goods and/or services it sells in the marketplace (C) All forms of promotion, such as advertising, publicity and public relations (D) The process of developing a product and implementing a series of strategies aimed at promoting, pricing and distributing the product to a core group of customers 2 Mobile Buzz has developed a new marketing plan that seeks to attract the interest of young adult mobile phone users. Which strategic role of marketing is this concerned? (A) Choice (B) Market share (C) Standard of living (D) Brand awareness 3 Which of the following strategies could a business use to increase its market share? (A) Market research (B) Discount pricing (C) Product testing (D) Quality control procedures 4 Which of the following is a product that is sold in the mass market? (A) A product that has appeal to a limited number of individuals (B) A product that is characterised by a high price and low sales (C) A product that has appeal to a number of different groups (D) A product with features and attributes that are very similar to those of competitors’ products 5 Rheanna and Hayley have developed a new range of female swimwear aimed at women aged between 18–35. What is this new product’s market commonly referred to as? (A) Resource market (B) Mass market (C) Market segment (D) Select market 6 With information obtained from market research, Therese hopes to establish a product that is more suited to consumers’ needs, using relevant pricing and promotional strategies. Which form of approach would Therese be using? (A) Production (B) Selling (C) Marketing (D) Societal 7 ‘Turn on tomorrow’ and ‘i’m lovin’ it’ are the slogans that Samsung and McDonald’s use to promote the quality of their products. Which form of orientation do these slogans emphasise? (A) Selling (B) Marketing (C) Societal (D) Production 8 Which of the following statements best describes the relationship between the marketing and operations functions of a business? (A) The operations department work closely with the marketing department to incorporate product features that consumers will respond positively to (B) The operations department produces goods and services within a budget developed by the marketing department (C) The operations department is responsible for the recruitment of staff, who then produce goods and services favourable to the needs and wants of consumers (D) The operations department develops goods and services from which the marketing function becomes responsible for promoting 9 Hilltop Mining are one of Australia’s largest iron ore exporters. Which type of market does this business operate within? (A) Resource (B) Industrial (C) Intermediate (D) Consumer 10 Quicksmart Supermarkets have developed a marketing strategy that incorporates an emphasis on production quality, discount pricing and a wide distribution of its stores. Which of the following approaches is the business using? (A) Production (B) Selling (C) Marketing (D) Relationship Short-answer questions 1 (a) Explain how a consumer market differs from the other types of markets in the business environment. (b) Describe and give examples of the three types of consumer markets. 2 Andreanna has decided to establish a homeware store. She believes that the quality of her products, for which she has been recognised, will ensure the success of the business. Vanessa is also opening a similar store but has conducted market research to develop a more thorough understanding of her local area and their needs. Outline how the approach that Andreanna is using differs from that used by Vanessa. Extended-response question Marketing is essentially aimed at selling the goods and/or services of a business. Describe what is meant by the term marketing and explain, with reference to the different types of markets the different types approaches to marketing businesses may use to market their products. Activity Comprehension 1 Describe how an improvement in economic conditions could influence customers’ buying behaviour. 2 Examine the importance of sociocultural factors in influencing customer choice. Activity Comprehension 1 Explain why deceptive and misleading advertising is considered to be unethical. 2 Deduce whether it should be the role of the consumer to be more careful when making commercial decisions. Activity Comprehension 1 Define what is meant by resale price maintenance. 2 Identify two examples of how a business may engage in deceptive and misleading advertising. Multiple-choice questions 1 Which of the following scenarios best describes the practice of price discrimination? (A) Smarta Electrics sells air conditioners to consumers located in different geographic areas at different prices (B) Sing Lee and Davie Jones each sell the same digital video camera but at different prices (C) Vision Central offers discounts to pensioners and to consumers willing to pay cash (D) The manufacturer of Toko cars sells the cars to different car dealerships at different prices 2 Helen visits a furniture store hoping to purchase an outdoor setting that was advertised as being priced ‘below cost’. When Helen asks the salesperson to show her the setting, she is told that there was only a very limited number and they were sold that morning. Helen is then shown a more expensive style of outdoor setting. This practice is typically known as: (A) Bait and switch advertising (B) Sugging (C) Retail price maintenance (D) Higher costs 3 Ben’s pies are advertising their food products as ‘97% fat free’. Independent tests reveal the fat content is actually greater than this. Which of the following processes is the business engaging in? (A) Deceptive advertising (B) Price discrimination (C) Taste in advertising (D) Sugging 4 Psychological factors are reflected through which part of consumer behaviour? (A) Their personality (B) Their culture (C) Their income (D) Government policies 5 People of similar age, income and ethnicity will not always buy the same types of goods. What factor influencing consumer choice is reflective of this? (A) Culture (B) Lifestyle (C) Socioeconomic status (D) Government 6 What are two economic factors influencing consumer behaviour? (A) Culture and lifestyle (B) Income and financial commitments (C) Culture and socioeconomic status (D) Perception and culture 7 Isam has applied to a religious council to receive approval for the ingredients of the products he uses in his food business. He believes this will allow his business to better cater to the religious needs of his customers. What factor has influenced Isam’s decision? (A) Socioeconomic status (B) Culture (C) Income (D) Learning 8 A consumer’s decision to buy up-market clothing brands would be influenced by which factor? (A) Culture (B) Personality and self-concept (C) Government policy (D) Motivation 9 The Reserve Bank of Australia has lowered interest rates as a way of encouraging consumers to increase their level of spending. Which government policy is this an example of? (A) Monetary policy (B) Fiscal policy (C) Microeconomic reform (D) Industry reform 10 Which of the following represents a criticism of the concept of sugging? (A) Its ability to promote products in a misleading manner (B) Consumers are made to believe that the purpose of the questionnaire is legitimate market research (C) Consumers pay higher prices (D) The business is able to identify the needs of consumers in a deceptive way Short-answer questions 1 Explain how economic and government factors influence a business’s marketing plan during a downturn in economic activity. 2 Describe the role of ethics for a business developing a marketing campaign. Extended-response question Identify the factors influencing consumer choice and examine the impact of ethical and legal regulations on the process of marketing of a product. Activity Comprehension 1 Examine how a SWOT analysis assists a business to consider its current position within the marketplace. 2 Discuss how the different stages of the product life cycle influence a business’s choice of marketing strategies. Chapter revision task Tonad Consulting has provided you with a summary of its report to the owners of Arabia, a well-known Middle Eastern restaurant located in Sydney’s inner west. The summary is given below. Read the summary and then answer the questions below. Arabia is one of the northern beaches’ most respected eateries. It is held in high regard for the quality of its food and the outstanding service it provides. Its client base, 30–45-year-old females, tends to be very loyal. Rising rental costs have forced the owners of the restaurant to consider increasing the price of all main meals. They are showing some hesitation in doing this as a newly established competitor in the area has been successful in attracting a more diverse group of customers to its restaurant. It is recommended by our consulting firm that Arabia use local-based advertising to generate increased awareness of its outstanding products and service. It is very likely that the rising rents will force an increase in prices. However, we believe that when more consumers become aware of the business, Arabia will benefit through increased revenue. 1 Identify which stage of the product life cycle Arabia is in. 2 Discuss two strengths of Arabia. 3 Identify the name given to the type of market Arabia has targeted. 4 Identify two threats facing Arabia. 5 Recall the name given to the customer group of Arabia’s competitor. 6 Outline two marketing strategies the consulting firm recommends Arabia use. 7 Outline the market objective the consulting firm best believes the restaurant should pursue. Multiple-choice questions 1 Painaway is a recognised and trusted form of minor pain-relief medication. In a SWOT analysis, what would Painaway’s reputation be considered to be? (A) A strength (B) A weakness (C) An opportunity (D) A threat 2 Due to heavy discounting and changes in peoples travel patterns, a budget motel has ceased trading. During which stage of the product life cycle is the business presently in? (A) Establishment (B) Growth (C) Post-maturity – decline (D) Post-maturity – renewal 3 What do market segments allow a business to do? (A) Develop and sell its product to a number of different markets (B) Identify the characteristics of people who will most likely purchase its product and then develop appropriate promotional and pricing strategies (C) Choose a price that appeals to a select group of customers (D) Examine the purchasing trends of its target market 4 What is the name given to the core group of customers to whom a business primarily promotes and prices its products? (A) Target market (B) Market segment (C) Niche market (D) Mass market 5 Which statement best describes a product targeted at a niche market? (A) A product with high turnover and a large consumer base (B) A product with appeal to large groups of customers (C) A specialised product with appeal to one segment of a market (D) A product with little or no differentiation between it and competing products but with wide appeal 6 Better Bread has released a new form of bread aimed at children. Which word best describes the market to which this product is targeted? (A) Consumer (B) Mass (C) Differentiated (D) Niche 7 Antoinetta is a new magazine aimed at young adults who display an interest in cooking. To which type of market is this product being targeted? (A) Micro (B) Niche (C) Concentrated (D) Segment 8 Market objectives can, at best, guide the operations of a business but cannot dictate its actual progress. What would be the best reason for this? (A) A business may lack the human and financial resources necessary to achieve the objectives (B) Any business is subject to the forces of its external environment, which can easily impact on the operations of the business (C) Management may decide to review the marketing plan and alter any strategies that it regards as ineffective (D) Market objectives tend to have a short-term time frame and therefore are in constant need of change 9 What is market research? (A) The process of examining market trends and their impact on the operations of a business (B) The study of consumers’ buying behaviour (C) A process of gathering information relevant to the needs of the business and those of its clients (D) The study of the operations and practices of a business’s competitors 10 What do external sources of secondary research refer to? (A) Data that have been collected by the business for a specific purpose (B) Data that have been previously collected by the business and are used for a different purpose (C) Data that are not collected by the business and are to be used for a specific purpose (D) Data that have not been collected by the business and are used for a variety of purposes Extended-response question Helen’s is an upmarket fashion boutique store in Sydney’s east. Falling sales have been reflected by surveys that reveal consumers’ view the business as outdated and no longer relevant to consumers’ needs. Strong competition in the area has placed considerable pressure on pricing. The business’s target market, 50–65-year-old females, no longer dominates the now younger demographic character of the area. Develop a marketing plan for the business that suggests how Helen’s may improve its performance. Activity Analysis For each of the situations described below, identify the pricing strategy used by the business. 1 Longstar Air has entered the Australian domestic market with prices much lower than those of its competitors. 2 Big T is selling its televisions at cost price to encourage consumers to visit its stores and become more aware of its range of DVD recorders. 3 Samir has received a discount for making a bulk purchase of timber from Harry’s Hardware. 4 Josephine Watches have an exclusive image and, therefore, are sold at a considerably higher price than watches sold by a competitor with a less upmarket image. 5 Eastside Bank has lowered its fees because of a fall in the number of new customer accounts being opened. 6 Textafone has established different pricing rates for its various mobile phone packages. Activity Comprehension 1 The distribution channels can be categorised as intensive, selective and exclusive. Describe these three ways that a business may sell its products to consumers. 2 Explain why a business should consider transport and warehousing issues in determining the most appropriate form of physical distribution for its products. Activity Comprehension 1 Explain the importance of primary market research for a global business. 2 Summarise global branding and what difficulties in marketing a global business may experience with branding. Chapter revision task Define the following terms using an example of each Keyword • Market segmentation • Demographic • Marketing mix • Branding • Penetration pricing • Market skimming • Above the line • Word of mouth • Place • Intensive distribution Multiple-choice questions 1 SuperFizz has released a new soft drink targeted towards women aged 18–39 years. Which form of market segmentation is SuperFizz using? (A) Demographic (B) Geographic (C) Psychological (D) Behavioural 2 Which statement best describes behavioural segmentation? (A) (B) Market segmentation based on the use of particular products by a certain group of customers Market segmentation based on the earning capacity of individuals (C) Market segmentation based on a target group’s age, gender and economic status (D) Market segmentation based on an individual’s lifestyle and personality 3 Mobile phone companies are well-known for their ability to offer consumers a basic product at several different price levels. At each level, the features that the consumer will receive differ. What form of pricing strategy would such a business be using? (A) Penetration pricing (B) Price lining (C) Market skimming (D) Competitive pricing 4 Which of the following examples presents the pricing strategy of market skimming? (A) (B) (C) (D) Tonasonic releases a new DVD recorder that is unlike any of its competitors’ products and it is priced very low to quickly establish a market share Jetfly Airlines has reduced its prices as a result of its competitors lowering their prices Hannah introduces a buy-one-get-one-free promotion for her cafe’s new lunch menu Red Star Medical has released a new form of medicine to relieve chronic arthritis and, in order to recover the research and development costs, the business is charging a high price for the product 5 What is meant by the position of a product? (A) The image of the product in the mind of the consumer (B) The location of the product in retail stores (C) The image of the product against its competitors (D) The location of the product in wholesale stores 6 A business’s reputation, logo and slogan and consumers’ expectations of its product are features of which element of the marketing mix? (A) Positioning (B) Branding (C) Packaging (D) Price and quality 7 Nadton Motors has decided to use a popular racing car driver to promote the quality and value of its range of motor vehicles. Which element of the marketing mix is being used? (A) Product (B) Price (C) Promotion (D) Place 8 Why does the marketing mix need to be differentiated when selling goods in different countries? (A) It ensures promotion does not offend customers in the domestic market (B) People in different countries like different things (C) It can make marketing appropriate for the foreign market in which it is sold (D) It advertises the product 9 Aco-Pop is a healthy soft drink style beverage. Its manufacturer has decided to first sell the product only at health food stores around the country. Which form of distribution is being used? (A) Intensive (B) Selective (C) Exclusive (D) Mass 10 What are global brands? (A) They are logos that are easily recognised in different languages (B) They are the products that are sold worldwide (C) They are the name used to identify a range of products worldwide (D) They are a method of promotion used in different countries by the same business Short-answer questions 1 (a) (b) 2 (a) (b) Define the term market segmentation. Outline the four keys methods used by business to segment consumer markets. Explain the role of product in the marketing mix. How do businesses use different elements of the product strategy in their marketing mix? Extended-response question Market segmentation serves a considerable purpose for the operations of a business. Outline the benefits that market segmentation offers a business and describe, using examples, how businesses use market segmentation to target particular consumer groups.