Knowledge Organiser - 3.1 Marketing What is the definition of marketing? Marketing is more than just selling. It’s all about ‘identifying, anticipating and meeting customer needs’ Knowledge Organiser - 3.1 Marketing Sampling and its methods It would be expensive and time consuming for a business to ask its entire target market therefore it instead takes a sample from it Method 1: Random sampling – every respondent or person from the target population has an equal chance of being chosen Method 2: Stratified random sampling. This aims to get a ‘representative’ sample of the population. The population is divided into categories/stratums e.g. age, gender, income etc. and then a random sample is taken Method 3: Quota sampling. Here the population is divided into a stratum e.g. gender and then a ‘quota’ is taken from each stratum – a ‘limit’ on the number of people asked Disadvantages of carrying out market research? Cost – market research costs time and money “as well as” this there is no guaranteed benefit in it “because” you could spend time and money on the research and conclude that the product idea or business isn’t viable and therefore not doing Reliability – the results could be skewed and biased “which would then” make them useless in helping to make a informed decision. What are the benefits of marketing for a business? It reduces the risk of product failure “because” you constantly try and identify, anticipate and meet customer needs “which means” there will be demand for the product “therefore” making it less likely to fail. Increases brand awareness “therefore leading to” greater customer loyalty “and” the possibility of increased repeat purchasing “consequently” increasing sales and profits It helps firms understand their customers better “which means” it can develop new products to meet their needs “leading to” more sales because they will be demanded more Advantages of carrying out market research? Identify gaps in the market and “thereby” develop new products or services that customers want “which” gives the business a competitive advantage over rivals and “therefore” increased market share and profit Collect information on rivals “which means” you’ll better understand their strengths and weaknesses “therefore” it can help a business make more informed decisions about whether its worth expanding, how it can best compete with others in the market (should it be on price or quality of product…) etc. You can find out about changing customer needs “which means” a business can change its marketing mix to meet theses ‘new’ needs “therefore” resulting in better sales “because” they can out compete rivals. What are the advantages and disadvantages of quota sampling? The advantages are that its simple to do and isn’t time consuming. The disadvantages however are is that it’s not random – so a risk of bias. You also need to understand the population in depth to identify the basis for stratification What are the three steps when carrying out market research? Step 1: carrying out the market research. Here the firm will make decisions about its aims and research methods Step 2: doing the research. Here the firm will need to decide on its sample size Step 3: analysing the research. Here the firm will need to decide how it’s going to use the information, have the aims been fulfilled and highlight any trends What are the advantages and disadvantages of random sampling? The advantages are that its simple to do and isn’t time consuming. The disadvantages however are is that you may not get a true representation of your target population and this could skew your results. Is market research more important for a small or large business? It “depends on” the industry the firm operates in – if it’s dynamic then innovation and new product launces are important. It also “depends on” your customer base. Large businesses like Tesco have greater customer bases and therefore more customer needs that need to be met – market research therefore is important It also “depends on” finance – can the business afford to carry out detailed market research? What are the advantages and disadvantages of stratified sampling? The advantages are that it avoids the problem of misrepresentation of the population caused by random sampling The disadvantages however are it takes time to plan What are the different research methods a firm could use? Market research methods can be either primary or secondary. Market research can also be quantitative and qualitative Examples of decisions that market research could help a business make? Decisions on the marketing mix (4Ps)

Knowledge Organiser - 3.1 Marketing What is the difference between product trial and repeat purchase? Product trial is when customers buy a good for the first time and assess whether they want to buy it again Repeat purchase is when a customer buys a product more than once Knowledge Organiser - 3.1 Marketing The four boxes in the Boston Matrix and their characteristics Star High market share in a high growth market Generates a lot of revenue Equivalent to the “growth” stage of the product life cycle Dog: Low market share in a low growth market Equivalent to the “decline” stage of the product life cycle Negative cash flow Cash cow: High market share but in a low growth market Equivalent to the “maturity” stage of the product life cycle Problem child: Low market share but in a high growth market Equivalent to the “launch” stage of the product life cycle How can a business turn product trials into repeat purchases? To turn trials into repeat purchases a business needs to offer products/services at a price that offers value for money Cash flow and the product life cycle Phase 1: Launch Inflows: Low Outflows: High Net cash flow: Negative/deficit Phase 2: Growth Inflows: Begin to increase/high Outflows: Lower Net cash flow: Positive/surplus (small) Phase 3: Maturity Inflows: High Outflows: Low Net cash flow: Positive/surplus (large) Phase 4: Decline What is the product life cycle? It is a model which describes the stages a product goes through from launch to decline. What are the methods that will help persuade a customer to product trial? Advertising - customers are more likely to trial a product they have heard of, “so” advertising increases awareness of the product “and” makes it more credible “which” makes customers trust it Public relations (PR). Part of this is viral marketing - getting people to spread a message about a product through social media like Twitter and Facebook Free samples User testing Low prices e.g. BOGOF The four phases of the product life cycle and their characteristics Phase 1: Launch High costs due to advertising etc. Low or negative profits Low level of sales (demand) Low level of competition Phase 2: Growth Profits start to rise Cost begin to lower Increase in sales/demand Competition begins to rise as increase in profits attracts others Phase 3: Maturity Business in profit Costs reduce as product is established so less money on marketing Sales reach their peak and begin to fall Competition high Focus here on extending this phase & protecting market share Phase 4: Decline Profits start to fall Costs reduce (stop marketing costs) Sales/demand decline as unable to attract customers Competition is high Temporarily reverse this phase by reducing price Definition of extension strategies An extension strategy is used by a business in order to extend the life of the product before it goes into decline. Boston matrix strategies Divest – linked to Dog and Problem Child Harvest – linked to Cash Cow Hold – linked to Star Build market share – linked to Star and Problem Child Methods that will help persuade a customer to repeat purchase? Promotion – helps keep the brand image of the product in the customers minds Price – lowering price creates repeat purchase because demand will increase Product - Updating products (or product ranges) will help keep customer loyalty Place - making products easily available ensures they repeatedly buy them Examples of extension strategies Reducing the price Adapting the product i.e. adding ‘extra flavour’ or having ‘less fat’ Introducing promotional offers i.e. BOGOF Develop a wider product range to include new varieties Advertising Benefits of the Boston matrix Helps to balance a firm’s product portfolio at different stages of the product life cycle Helps firms to identify Dogs Helps a firm to plan for the future What is the Boston Matrix A model that analyses the product portfolio of a business according to market growth and market share

Knowledge Organiser - 3.1 Marketing What is branding? Branding is the use of a name or logo to give a product an identity Advantages of branding and differentiation? You can charge a premium price because it adds value Helps develop customer loyalty & repeat purchases thereby making them ‘brand loyal’ Differentiation is very important if competition in the market is intense - helps remain competitive as you have a USP How is product trial, repeat purchase and product range linked to branding? Product trial: Customers are likely to trial a product with an already established brand because its trusted and well-known Repeat purchase: One of the key benefits of having a strong brand is customer loyalty which will increase revenue because of repeat purchasing. These customers can be said to be “brand loyal” Product range: Businesses use their products ranges as a form of branding. For example Tesco’s “Finest” range is an example of ‘own branding’ Disadvantages of branding and differentiation? Costly Branding? That’s just a logo isn’t it? Discuss. A part of branding is creating a logo for a product however I believe it’s much more than that. Branding is about creating an identity and status in mind of the customer for your product/service, in order to differentiate itself from competitors, which will encourage brand loyalty from them. This could lead to repeat purchases and therefore the business having constant cash flow which will help it succeed. If the business were to launch a new product in the future, customers are much more likely to trial it because it’s a brand they trust. What are the definitions of ‘differentiation’ and ‘unique selling point’? Differentiation: It means giving your product or service a competitive advantage by making it stand out from its rivals USP: a specific feature that makes a product different from its rivals. How can you differentiate a product/service? Design of product Logo Packaging Price