Business Unit 3: Marketing

Market Share

The proportion of total market sales held by one brand or business

Mass Market

selling the same product to the whole market
-benefit from economies of scale
-more competitors which lowers prices

Niche Market

a small segment of the market
-small businesses will survive due to customers willing to pay higher prices for exclusive products
-unlikely to benefit from ecconomines of scale

Market Segment

a part of the whole market in which consumers have a specific characteristics
-marketing stratagies can be better targeted in each section

geographic segmentation

dividing the consumers by geographic area (regions)

demographic segmentation

dividing the consumers by: age, family size, gender, income

psychographic segmentation

dividing consumers by lifestyle and personality

Market Research

Gathering, analyzing and interpreting information about a market.

Market orientated

Carrying out market research to find out consumer wants before developing and producing a product.

Product orientated

Business that focuses on the product itself, not the market for it.

Primary Research

Collection of original data also known as field research.

Secondary Research

Information that has already been collected but is available for use by others (desk research).

Unique Selling Point (USP)

The special feature of a product that differentiates it from the products of competitors.

Brand Name

The unique name of a product that distinguishes it from other brands.

Brand Image

The identity of a product that consumers can recognize and which gives it a "personality" distinct from other products.

Price elastic demand

the percentage change demand is greater than the percentage change in price

Product Life Cycle

Price inelastic demand

the percentage change in demand is less than the percentage change in price

Extension strategy

A way of keeping a product at the maturity stage of the life cycle and extending the cycle

Distribution Channel

The means by which a product is passed from the place of production to the customer.

Cost-plus pricing

adding a fixed amount to the cost of the product
-quick and easy
-price might be higher than competitors

Competitive pricing

The price is the same as or just below the price of competitors' products to try to capture more of the market
-need more ways of competing other than similar price

Psychological pricing

The pricing is set to match the consumers' expectations and perceptions of the product
-little revenue is lost from putting price just below what the business wants to sell it for
-competitors will do the same thing

Price skimming

The price is set high for a new product on the market
-creates quality image
-might be expensive for customer (loss of sales)

Penetration Pricing

The price is set lower then competitor's prices to enter a new market and gain market share
-attracts customers quickly
-loss of revenue (low prices)

Price elasticity

A measure of the responsiveness of demand following a price change

producer - consumer

-all profit earned by the producer
-quick
-consumer does not want to go to all the way to factory

dynamic pricing

adjusting prices continually to meet the characteristics and needs of individual customers and situations
-increase in sales

producer - retailer - consumer

-retailers pay for most things (reduced costs for producer)
-retailers take some profit

producer - wholesaler - retailer - consumer

-wholesaler buys in bulk (reduces storage costs)
-profit and control is lost from producer

producer - agent - wholesaler - retailer - consumer

-agent knows the market (mainly new markets)
-more middle men