Marketing Strategies and Market Research
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Questions and Answers

What is a primary risk entrepreneurs often face when starting a business?

  • Consistent profits
  • Debt and financial loss (correct)
  • Expansion opportunities
  • Increased market share

Which of the following is NOT a characteristic of cash cows in the Boston Matrix?

  • Have high market share
  • Provide large positive cash flow
  • Operates in slow-growing markets
  • Require high advertising costs (correct)

Which promotion strategy aids in improving customer loyalty?

  • Aggressive pricing tactics
  • Personalization of communication (correct)
  • Broad market targeting
  • High advertising spend

What does opportunity cost refer to in business decisions?

<p>The potential profit from alternative investments (A)</p> Signup and view all the answers

Which strategy is most appropriate for 'problem children' in the Boston Matrix?

<p>Invest selectively or re-launch (A)</p> Signup and view all the answers

How do necessity products typically behave in terms of elasticity?

<p>They show inelastic behavior (C)</p> Signup and view all the answers

What aspect of distribution has changed significantly due to social trends?

<p>Transition to online services (D)</p> Signup and view all the answers

Which business objective focuses on breaking even during challenging times?

<p>Survival (D)</p> Signup and view all the answers

What is the primary purpose of a mission statement?

<p>To define a business's core purpose and focus. (D)</p> Signup and view all the answers

Which of the following is NOT a factor influencing the choice of a promotion strategy?

<p>Production methods (C)</p> Signup and view all the answers

Which pricing strategy involves setting a high initial price to recover research and development costs?

<p>Price skimming (C)</p> Signup and view all the answers

What is a potential limitation of the product life cycle concept?

<p>It assumes all products follow a uniform cycle. (C)</p> Signup and view all the answers

Which of the following is an example of a sales promotion?

<p>Vouchers (A)</p> Signup and view all the answers

Which is a characteristic of predatory pricing?

<p>Aggressively cutting prices to eliminate competition. (C)</p> Signup and view all the answers

How can businesses extend the life of a product?

<p>Reducing prices or offering promotions. (D)</p> Signup and view all the answers

What does product portfolio analysis aim to achieve?

<p>Improve market performance of each product or brand. (A)</p> Signup and view all the answers

What does the opportunity cost represent in business decision-making?

<p>The next best alternative forgone (A)</p> Signup and view all the answers

Which of the following best describes Risk in a business context?

<p>The chance of loss or damage (B)</p> Signup and view all the answers

Which pricing strategy would be most beneficial for inelastic products when prices increase?

<p>Increase prices to reduce demand loss (B)</p> Signup and view all the answers

What type of goods have negative Income Elasticity of Demand (YED)?

<p>Inferior goods (D)</p> Signup and view all the answers

When should a business emphasize on normal luxury products according to the Income Elasticity of Demand?

<p>During periods of stable economy (B)</p> Signup and view all the answers

Which factor does NOT influence unit costs?

<p>Market demand (C)</p> Signup and view all the answers

What does high capacity utilization do to fixed costs per unit?

<p>Reduces fixed costs per unit (D)</p> Signup and view all the answers

What is a key implication of low capacity utilization in a business setting?

<p>Higher fixed costs per unit (B)</p> Signup and view all the answers

Flashcards

Mission Statement

A business's core purpose and focus, remaining constant over time.

Marketing Objectives

Goals that provide direction, motivate stakeholders, and measure business performance.

Promotion

Communicating with consumers to sell products, with goals like introducing new products and enhancing the business image.

Pricing Strategies

Methods for setting product prices based on factors like cost, target market, and competition.

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Product Portfolio Analysis

Examining individual products/brands to improve market performance.

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Product Life Cycle

A product's stages from introduction to decline; helps businesses plan marketing.

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Extension Strategies

Methods to prolong the life of a product, through changes in product, price, or place.

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Pricing Strategy

Methods businesses use to set prices, considering factors like competitor pricing, product costs, and target market.

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Unit Cost

Total costs divided by the number of units produced.

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Capacity Utilization

Current output as a percentage of maximum potential output.

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Price Elasticity of Demand (PED)

How demand changes in response to price changes.

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Inelastic Product (PED)

Products with less responsive demand (PED < 1).

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Elastic Product (PED)

Products with more responsive demand (PED > 1).

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Income Elasticity of Demand (YED)

How demand changes with income.

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Opportunity Cost

The next best alternative forgone when making a choice.

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Risk (in business)

The chance of unfavorable outcomes, such as business failure or lost investment.

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Cash Cows (Boston Matrix)

High market share in slow-growing markets, mature life cycle, high cash flow.

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Stars (Boston Matrix)

High share in fast-growing markets, high marketing costs, positive or neutral cash flow.

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Dogs (Boston Matrix)

Low share in mature markets, primarily losses, and little profitability.

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Problem Children (Boston Matrix)

Low share in growing markets, uncertain future profitability.

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Retailing (Distribution)

Direct sale of products to customers from a physical shop. Provide a hands-on experience.

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E-tailing (Distribution)

Online retailing, offering global reach and 24/7 availability.

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Study Notes

Marketing Strategies

  • Marketing aims to identify, anticipate, and satisfy consumer needs profitably.
  • Mass markets target broad market segments with large-scale production and low prices, leading to lower profit margins. Examples include Primark.
  • Niche markets, like Louis Vuitton, focus on specialized products for smaller consumer groups, leading to higher production costs, higher prices but higher profit margins.
  • Market size and share are measured by sales volume or value. Market share is the percentage of total sales.
  • Branding differentiates products, adding value, increasing pricing power, and influencing a business's market position through perceived quality and legal protection.

Market Research

  • Market research involves gathering and analyzing data to reduce risks, understand customers, and identify opportunities.
  • Research can be qualitative (non-numerical insights) or quantitative (measurable data).
  • Primary research gathers new, tailored data, but it's costly. Secondary research uses existing data, which is cheaper but may be outdated.
  • Methods like questionnaires, focus groups, and product trials gather insights. Focus groups provide in-depth opinions, while product trials help refine products before launch.

Operations Management

  • Operations management focuses on designing, managing, and improving the processes that transform inputs into outputs (goods and services).
  • Key targets include maximizing efficiency, minimizing unit costs, and maximizing quality.
  • Unit costs are calculated as total costs divided by the number of units produced and are influenced by production volume, supply costs, and labor productivity.
  • Capacity utilization measures current output as a percentage of maximum potential output. High capacity utilization reduces fixed costs per unit; low utilization increases them.

Price Elasticity of Demand (PED)

  • PED measures how demand changes in response to price changes.
  • Inelastic products (PED < 1) have less responsive demand, due to high differentiation, few substitutes, and strong brand loyalty
  • Elastic products (PED > 1) have more responsive demand.

Income Elasticity of Demand (YED)

  • YED measures how demand changes with income.
  • Normal necessary products have a low but positive YED (e.g., milk). Demand rises slightly as income increases.
  • Inferior goods have a negative YED, where demand decreases as income rises.
  • YED is important for firms to predict sales during economic changes and to diversify product ranges to mitigate risks.

Opportunity Cost & Business Objectives

  • Risk refers to the chance of loss or damage (business failure, investment loss, debt).
  • The opportunity cost is the next best alternative forgone when making a choice.
  • Business objectives include survival, profit maximization, market share, cost efficiency, employee welfare, and customer satisfaction.

Distribution

  • Distribution involves making products or services available to customers when and where they need them.
  • Methods include retailing (physical shops), e-tailing (online), wholesalers (purchase from producers).
  • Factors influencing distribution include product type, speed requirements, distance.
  • Social trends are impacting how goods transition into online services.

Survival & Profit Maximisation

  • Survival involves breaking even during tough times, by reducing costs or prices.
  • Profit maximisation focuses on increasing sales and reducing costs.

Product Life Cycle & Portfolio Analysis

  • Product portfolio analysis examines each product or brand to improve market performance.
  • The product life cycle helps businesses plan their marketing mix and allocate resources effectively, although limitations exist.
  • Extension strategies can prolong a product's lifecycle, such as introducing new versions, offering limited editions, or updating packaging.
  • The Boston Matrix categories products based on market share and market growth.

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Explore the essential concepts of marketing strategies and market research. This quiz covers mass and niche markets, branding, market size, and the importance of qualitative and quantitative research methods. Test your knowledge on how these elements influence consumer behavior and business success.

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