Marketing AS level-top 30 revision terms(5)

Primary research:is the gathering of first- hand date that is tailor-made to a firm' s own products, customers or markets.This is carried out by fieldwork, whereas secondary (second-hand) date is gathered by desk research.
Product differentiation:is the extent to which consumers perceive one product as being different from its rivals.A highly differentiated product is one which people think pf as so distinctive that it has no acceptable substitutes.With low differentiation, a product would be one among many,with many direct, acceptable competitors.As a result, products with weak differentiation need to charge relatively low price in order to hold their market share.
There are two main sources of product differentiation:

• Actual product advantages, such as better design, better manufacture and higher quality standards
• Psychological factors such as branding and advertising.

Product life cycle:the theory that all products follow a similar life course of conception, birth,growth, maturity and decline, although products pass through these stages at different speeds.The modern cigarette was born in 1872 and sales peaked in 1973 (implying a product life cycle of around 200 years), whereas the entire sales life span of Pokemon cards was three years.
Factor affecting the length of a product's life cycle:

• Durability:if the item need be bought only once (such as a sandwich toaster) then market saturation can hit demand, as all those who want the item, have it
  
• Fashion: if the item's sales grew because of fashion , it is likely that they will die quite quickly, for the same reason
• Technological charge can be very significant in turning the customer away from a product that now seems obsolete.

An important implication of the theory is that as every product will eventually decline and die, it is necessary for firms to carry out continuous new product development programmes.Ideally, new products should be financed from the cash flows generated by mature brands and should be launched before maturity turns to decline. The product life cycle relates to company cash flow in the following way (see also diagram on below):

• During the development phase there is substantial negative cash flow from the money spent on research and development (R&D ), market research, product design, and setting up a production line

• If birth turns to growth, more cash must be ploughed into expanding factory capacity

• Once sales have stabilised, the firm can reap the cash rewards from their success
• In the decline phase, brands with a high market share can provide the cash for development of replacement products.(See cash cow.)

Product portfolio:the range of products or brands held by a company that provide it with diversified sources of income.Ideally this portfolio should range over different markets and different stages in the product life cycles.A well -known and very useful way of analysing a firm's product portfolio is through the Boston Matrix.
Qualitative research:is in-depth research into the motivation behind consumer behaviour or attitudes. It is usually conducted by psychologists among small groups people within the target market for the product (these are called group discussions of focus groups). The other main technique used by qualitative research is the depth interview.
The idea behind qualitative research is that when people are asked direct question (as in a questionnaire) they may give answers that make them sound sensible or rational.Yet many purchasing decisions are based on emotion, not logic.Consumers' real thought processes during a relaxed discussion that has no pre-set questions. It can therefore lead wherever the psychologist feels the truth lies.
Pros:

• can reveal the motivations behind consumer decisions
• as discussion can range freely, it can discover the unexpected (whereas questionnaires can only consist of questions that were known beforehand to be significant)
• group discussion can provide ideas about how to solve a marketing problem from the most important people of all: the customers

Cons:

• each interview or discussion is expensive, therefore few firms can afford to conduct many; this leads to possible concerns about whether the sample is representative
• the unstructured nature of the responses means that the data cannot be quantified