Market Segmentation Strategies Quiz

Promotion

• Promotion is any method used to encourage current and potential customers to buy products.
• Examples include advertisements, television commercials, and coupons.
• Promotion aims to create a positive image of an enterprise in the minds of customers and motivate them to buy the products.

Promotional Mix

• Enterprises use a combination of promotional methods, known as the promotional mix.
• This approach depends on the product and suitability for the size of the enterprise.

Methods of Advertising

• Moving image: Television, cinemas, video sites, promotional DVDs

• Print: Local and national newspapers, magazines, leaflets, billboards

• Ambient: Public places such as bus stops and shopping centres

• Digital: Company websites, social media (Pinterest, Instagram)

• Audio: Local and national radio

• Each method of advertising has specific benefits, including reaching a wide range of people or targeting very specific locations.

Advertising

• It aims to persuade and inform potential customers.
• Advertising message should focus on aspects of the goods or services like price, quality, or usefulness.
• The medium selected should properly target the correct customers.

Sales Promotion

• Methods to persuade customers to buy products that include coupons, money-off vouchers, free samples, competitions, prize draws, money off discounts, percentage reductions, loyalty incentives , points towards other products or free items, Buy-One-Get-One-Free offers, and free products on purchase of a full-price product.
• Benefits include attracting purchasers and encouraging repeat business.
• Limitations include possible impacts on profit if the cost of sales promotions is not covered.

Personal Selling

• A representative of the enterprise directly interacts with potential customers.
• The methods include face-to-face contact, phone calls (usually from a call center), emails, and video or web conferencing.

Public Relations (PR)

• PR is building and maintaining an enterprise's reputation.
• A positive public image is crucial to business success, impacting sales.
• It can incorporate activities like sponsorships, exhibitions, and press releases.
• Its purpose is to encourage positive views, positive publicity, and to protect the brand image.
• Methods like telemarketing are also important, such as contacting customers about products or offers.

Direct Marketing

• Includes mail order catalogues, leaflets, letters, brochures about new products
• This type of direct marketing is suitable for small to medium businesses.

Market Segmentation

• Market segmentation is the process of dividing a large market into smaller groups with similar characteristics.
• Enterprises do this for various reasons:
  • Understanding customers better.
  • Developing specific products for different segments.
  • Selecting the best promotional methods for different groups.
• Types of segmentation include demographic, geographic, behavioural, and psychographic.

Financial Records

• Financial records track the buying and selling process.
• Documents used include purchase orders, delivery notes, invoices, receipts, credit notes, and statements of account.
• These documents record the sale and purchase of goods and services.
  • Each documents has its own purpose and features.
  • Accurate financial records are crucial to ensure the correct amount of expenses and revenue are recorded.

Cash Flow

• Cash inflows are the money coming into an enterprise (like sales revenue), while cash outflows represent money leaving the enterprise (such as purchases).
• The difference between the cash inflow and outflow amounts is the net cash flow. An enterprise needs to know this for effective planning and forecasting.

Financial Statements

• Financial statements are summaries of an enterprise's activities over a period of time.
• These statements can help people who are interested in the business understand how well it is performing.
• The statements include comprehensive income (showing turnover, costs, and profit), and statement of financial position (showing assets, liabilities, and owner's equity).

Profitability Ratios

• Profitability ratios measure the ability to turn revenue into profit.
• Gross profit margin is the profit made from each £1 of sales revenue.
• Net profit margin is the amount of net profit generated for each £1 of sales.
• Profitability ratios are analyzed to help understand profitability better.

Liquidity Ratios

• Liquidity ratios measure an enterprise's ability to pay its debts.
• The current ratio considers inventory (stock) while the quick or liquid capital ratio excludes it.
• A liquid asset ratio above 1.5:2.1 is likely to signify that the business can fulfil short term obligations.

Break-even Analysis

• Used to determine the point at which total revenue equals total costs, resulting in no profit or loss.
• It involves considering fixed and variable costs, and unit price to calculate the break-even point (the level of sales at which the enterprise makes no profit or loss).
• This analysis is essential in planning. It helps to understand how many units or products must be sold to avoid loss.

Sources of Business Finance

• Internal Sources: This includes owner funds (savings), retained profits, and the sale of assets.
• External Sources: These include bank overdrafts, loans, hire purchase and venture capital. There are also grants from local or national governments.
• Different sources have different features and requirements for usage.