Marketing planning Flashcards Preview

Business Studies A2 Levels > UNIT 3. Chapter 18. Marketing planning > Flashcards

Study These Flashcards

FLASHCARDS IN UNIT 3. CHAPTER 18. MARKETING PLANNING DECK (41)
1

Def. Marketing plan

It is a detailed, fully researched written report on marketing objectives and the marketing
strategy to be used to achieve them.

What are the key contents of a marketing plan? (6)

• Purpose and mission

• Situational analysis

• Marketing objectives and strategy

• Marketing mix

• Marketing budget

• Executive summary and time scale

3
 Key contents of marketing plan: Purpose and mission

Providing the audience, for example potential financial investors, the purpose of the
plan - is it to prepare the business for the launch of a new product.

Key contents of marketing plan: Situational Analysis

• To identify where the firm 'is' now: find current strengths and weaknesses, market
shares and etc.

• Done through extensive market research

• Done to avoid misdirecting the plan

• 5 main areas: Current product analysis, Target market analysis, Competitor analysis,
PEST analysis, SWOT analysis.

Key contents of marketing plan: Marketing objectives and strategy

Marketing objectives

• Have to be SMART to the firm

• It can be broken down into specific targets for each section

• Gives clear and measurable objectives which gives a sense of direction and allows
measurement of progress.

Marketing strategy

• Outlines how the company intends to achieve the marketing objectives

• (Doesn't really deal with Marketing mix) Example of things it deals with: To pursue
mass marketing or niche?

6
 Key contents of marketing plan: Marketing mix tactics

A brief:

• Product: Explains key features of the products like branding and packaging.

• Price: Making pricing decisions based on the price elasticity, costs, competitors etc.

• Promotion: Advertising, sales promotion, public relations and personal selling.

• Place: Shows distribution plan and channels and the outlets that sell the products.

The marketing mix has to be fully integrated to be effective.

Key contents of marketing plan: Marketing budget

The plan should lay out the spending requirements necessary to meet the plan's overall
objectives.

Key contents of marketing plan: Executive summary and timescale

Shows the overall summary and the timescale over which it will be introduced.

Benefits of a Marketing plan (3)

• In order to convince potential financial investors that the business plan is sound and
profitable.

• Reduces risks when new strategies are introduced.

• Forces marketing personnel to look at the business's current position to provide

direction for future decisions for the department and the whole organisation (because
the marketing plan cannot be made in isolation from other departments).
10

Potential limitations of a marketing plan (4)

• Complex, costly and time consuming

• Business with lack of management expertise cannot make up the plan

• In fast changing markets, the plan may be outdated before it is published.

• Managers who have put a lot of effort into the plan may not want to change it ->
inflexibility can damage business's prospects

11

Types of elasticity of demand (4)

• Price elasticity of demand (done in AS)

• Income elasticity of demand

• Promotional elasticity of demand

• Cross elasticity of demand

12

Def. Income elasticity of demand

This measure the responsiveness of demand for a product following a change in

consumer incomes.

% Change in demand / % change in consumer incomes = Income elasticity of demand

13

Explain income of elasticity of demand results (3)

• Superior goods: Negative elasticity of demand (<0). Demand rises and as income falls,
and vice versa. e.g. Second hand clothing.

• Normal goods: >1 elasticity of demand. As income falls, demands falls and vice versa.
e.g. Branded sneakers.

• Necessity goods: Between 0 and 1. Demand usually stays the same even if consumer
incomes rises or falls. e.g. salt.

14

Def. Promotional elasticity of demand

This measures the responsiveness of demand for a product following a change in the
amount spent on promoting it.

% Change in demand / % change in promotional spending

15

Explaining promotional elasticity of demand results (2)

• Elastic of >1 => Business should spend more on promotion

• Not elastic if <1 => Business should NOT spend more on promotion

16

Def. Cross elasticity of demand

This measures the responsiveness of demand for a product following a change in the
price of another product.

% Change in demand for a good A / % Change in price of good B

17

Explaining cross elasticity of demand results (2)

• Complementary goods: Negative results. Because the goods are bought together, is
price of good B reduces, more people buy more both good B and A. e.g. Laptop and
Microsoft operating system.

• Substitutes goods: Positive results. Because the goods are competing for consumer
spending, when price of good B drops, demand for good B increases and good A
decreases. E.g. PS and Xbox

18

Potential limitations of calculating elasticity

Study These Flashcards

They are not reliable due to external factors. For example, with promotional elasticity,
the demand could have fallen due to competitors introducing a new product.

However, if the results obtained are being consistent, than the date is useful to base
future decisions on.

19

What does integrated marketing strategy mean? (2)

Study These Flashcards

• Integrated with other departments. e.g. Finance - with Marketing budget

• Four elements of the marketing mix to be integrated and supportive with each other.

20

Def. NPD

Study These Flashcards

New product development is the design, creation and marketing of new goods and
services.

21

Why do businesses need NPD?

Study These Flashcards

There's a constant need for development of new products in a fast changing markets in
order to keep up to date. E.g. of such firms: technology, pharmaceutical industry, or
industrial products.

22

What are the seven stages in the process of new product development?

Study These Flashcards

• Generating new ideas

• Idea screening

• Concept of development and testing

• Business analysis

• Product testing

• Test marketing

• Commercialisation

23

NPD stages: Generating new ideas

Study These Flashcards

New ideas can come from:

• R&D department

• Employees

• Salespeople

• Brainstorming in groups

• Adaptation to competitors ideas

24

NPD stages: Idea screening

Study These Flashcards

To eliminate the ideas that stand the least chance of being commercially successful.

25

NPD stages: Development and testing

Study These Flashcards

Developing the idea of the products such as it's key features, costs, potentially
consumers, production methods and etc.

26

NPD stages: Business analysis

Study These Flashcards

This stage considers the impact of the product on the organisation itself like affect on
costs, sales and profits. What are the expected sales revenue and market shares, and
how can the prices be set (potentially from competitors).

27

NPD stages: Product testing

Study These Flashcards

Concerns the performance of the product and whether it would meet the consumer's
expectations. Methods for testing are: developing a prototype, testing under typical
conditions, using focus groups.

28

NPD stages: Test marketing (Def, benefits (3) and limitations(2))

Study These Flashcards

Test marketing is the launch of the product on a small scale market to test consumers'
reactions to it.

Benefits:

• Feedback from consumers can aid final decisions

• Reduced risks of the launch of the product

• Easier to identify the weakness in the product

Limitations:

• Expensive

• Competitors can observe the product and launch a copy right away

29
 NPD stages: Commercialisation

Study These Flashcards

This refers to the full scale launch of the product, which corresponds with the
introduction phase of the product life cycle.

30

Def. R&D

Study These Flashcards

Research and Development is the scientific research and technical development of new
products and processes.

31

Importance of R&D

Study These Flashcards

Generate new product possibilities which allow the business to survive and grow in
rapidly changing market places.

32

Factors that influence the level of R&D expenditure by a business (4)

Study These Flashcards

• The nature of the industry: e.g. Computer producing firms spend a lot more than
hotels.

• The R&D spending plans of competitors

• The risk profile or culture of the business: e.g. whether shareholders are willing to
invest for the long term benefits

• Government policies: whether grants are provided

33

When would products with thorough R&D fail? (4)

Study These Flashcards

• Inadequate market research

• Poor marketing support

• Changes in technology makes the product outdated

• Competitors release a product that the consumers prefer

34

Def. Sales forecasting

Study These Flashcards

Predicting future sales levels and sales trends.

35

How can different departments benefit from sales forecasting?

Study These Flashcards

• Operations department would know how many materials to order and plan out stock
levels

• Marketing department would be aware of how many products to be distributed

• Human resources can have appropriate level of staffing

• Finance could plan cash flows more accurately

36

Quantitative forecasting methods: Correlation

Study These Flashcards

• Plot a graph of prices, consumer income, the weather or etc against sales.

• Identify whether there is a positive or negative correlation, and whether it is strong or

weak.

• Limitation: it fails to consider other factors, such as seasonal changes.

37

Quantitative forecasting methods: Time-series analysis

Study These Flashcards

• This method is based entirely on past sales data

• These can be plotted into a graph of sales against time

• The values can be EXTRAPOLATED, meaning extending the line into the future based
on the past trends.

• This is only effective is sales patterns remain stable into the future (which is unlikely).

• The values can be calculated as MOVING AVERAGES.

38

What do moving averages identify? (4)

Study These Flashcards

Moving average identify the factors that are expected to influence future sales. These
are:

• The trend

• Seasonal fluctuations

• Cyclical fluctuations

• Random fluctuations

39

Def. the 4 factors that influence future sales

Study These Flashcards

• The trend is the underlying movement in a time series

• Seasonal fluctuations are the regular and repeated variations that occur in sales data
within a period of 12 months.

• Cyclical fluctuations are variations in sales that occur over periods of time of much
more than a year and are due to business cycle.

• Random fluctuations can occur at any time and will cause unusual and unpredictable
sales figures.

40

Explanation of how to calculate moving averages

Study These Flashcards

Pg. 359

41
 Advantages (2) and Disadvantages (2) of moving averages

Study These Flashcards

Advantages:

• Can be accurate short term

• Identifying seasonal fluctuations can help with future planning

Disadvantages:

• Quite complex

• Is inaccurate for long term predictions