3.3 key terms
- Created by: lara__001
- Created on: 28-12-18 16:07
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- 3.3 Decision-making to improve marketing performances
- Marketing - the process of identifying, anticipating (predicting) and satisfying customer needs profitably
- Objectives - statements of specific outcomes that are to be achieved
- Market research - conducting research to gain information about consumers' needs and what they expect from a product/ service
- Primary research - research that has been conducted by yourself
- Secondary research - pre-existing data where the research has been conducted by someone else
- Qualitative data - data expressed in words, opinions and thoughts
- Quantitative data - data expressed numerically
- Market map - a technique used to understand how products/ businesses are viewed relative to competitors based on two relevant characteristics
- Sampling - involves the gathering of data from a sample of respondents, the results of which should be representative of the population as a whole
- Extrapolation - uses trends established from historical data to forecast the future
- Correlation - looks at the strength of a relationship between two variables
- Strong correlation - little room between the data points and the line
- Weak correlation - data points are spread quite wide and far away from the line of best fit
- Confidence level - the probability that the research finds are correct e.g. 95% confidence level
- Confidence interval - the possible range of outcomes for a given confidence level e.g. 95% confidence that sales will be between £500,000 and £700,000
- Elasticity - measures the responsiveness of demand to a change in a relevant variable - such as price/ income
- Price elasticity of demand - measures the extent to which the quantity of a product demanded is affected by a change by change in price
- Price elastic - a product that if a 1% change in price happens, then it would result in a 2% change in demand - happens to luxury items
- Price inelastic - a product that if a 1% change in price happens, then it would result in only a 0.5% change in demand - happens to necessities
- Income elasticity of demand - measures the extent to which the quantity of a product demanded is affected by a change in income
- Income elastic - a product that if a 1% change in income happens, then it results in a 3% change in demand - happens to luxury items. It is used to classify goods as 'normal' or 'inferior'. Goods with an income elasticity greater than 1 can be classified as luxuries instead of necessities
- Normal good - when income rises, so does demand equally when income decreases, so does the demand - luxuries
- Inferior good - when income rises, demand decreases - consumers switch to better goods
- Income inelastic - a product that if a 1% change in income happens, then it results in only a 0.2% change in demand - such as necessities
- Income elastic - a product that if a 1% change in income happens, then it results in a 3% change in demand - happens to luxury items. It is used to classify goods as 'normal' or 'inferior'. Goods with an income elasticity greater than 1 can be classified as luxuries instead of necessities
- Price elasticity of demand - measures the extent to which the quantity of a product demanded is affected by a change by change in price
- The Marketing Mix - the 7 P's
- Product - everything that the customer buys - brand, features and benefits of a good or service
- Promotion - creating an awareness and desire to buy the product
- People - adding to the product by using the right people in the transaction
- Physical environment - matching the physical environment in which the transaction takes place to the product and brand
- Process - making the transaction convenient, efficient for the customer
- Place - using the right channels to get the product to the customer
- Price - set to match the expectations of customers and the features of the product
- Convenience items - goods that are bought on impulse e.g. chocolate
- Shopping goods - consumers will take their time to compare the product features e.g. shoes
- Speciality products - consumers take a long time to process information and make a decision e.g. phone
- Product Portfolio Analysis PPA - can be used to analyse and track the development of multiple products over time taking into account a number of factors such as growth, sales and market conditions
- Dynamic pricing - applied to products where price can fluctuate with the level of demand, such as hotel rooms
- Penetration pricing - applied to a new product attempting to enter the market. Initial price is low in order to penetrate the market by undercutting competitors. Over time price may increase as demand grows and reputation/ popularity builds
- Price skimming - the initial price is high so the profit in the established brands where anticipation for a new product is high. Particularly effective in technology markets
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