4.1, 4.2 Introduction to Marketing and marketing planning

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What is marketing?

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Marketing addresses people’s needs and wants by predicting what consumers may want in the future. (it is not only advertisement, it is looking into the market and seeing what is needed)

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What is Market orientation?

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When firms create products, based on what consumers want, and what the public prefers

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29 Terms

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What is marketing?

Marketing addresses people’s needs and wants by predicting what consumers may want in the future. (it is not only advertisement, it is looking into the market and seeing what is needed)

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What is Market orientation?

When firms create products, based on what consumers want, and what the public prefers

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What is product orientation?

When firms create products based on what they want, and their own skills and strengths e.g., british airlines wanted to create a plan that can cross the atlantic, and weren’t concerned whether or not it would sell

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What are advantages of market oriented firms?

  • Greater flexibility → respond to changes in demand

  • More profits can be made, as comsumers purchase their wants

  • increased customer satisfaction

  • Lower risk → firms can be sure that their products will sell

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What are disadvantages of market oriented firms?

  • market research is needed → finding out what consumers want can be expensive

  • consumer’s desires aren’t fixed and can change rapidly

  • they often need to have new workers or learn new skills, as they may not have transferable skills needed for each new product they create

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What are advantages of product oriented firms?

  • quality can be assured, as they are good at what they do → it is their passion

  • more control over operations → it is not determined by demand

  • no market research needed

  • they can often charge higher prices as products are likely to be higher quality, premium products

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What are disadvantages of product oriented firms?

  • The wants of the market are ignored → less oportunites to make profit and less customer satisfaction

  • high risk strategy with high failure costs

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What is market share?

Market share is an organizations share of the total value of sales within a specific industry

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How do you calculate market share?

(Firms sales revenue/industry sales revenue) x100

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What are benefits to firms with a high amount of market share?

  • Eliminate competition

  • brand-recognition and status

  • price setting abilities

  • lower risk of takeover

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How can a business increase Market share?

  • motivating and training their workforce

  • increasing efficiency

  • promoting brand

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What is market growth?

An increase in sales in an industry → the market size is increasing

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Market growth rate formula

(current market size - original market size)/original market size x 100

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What is a marketing plan?

A firm creating a plan and marketing strategies to reach their objectives and goals

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Advantages of marketing planning

  • improves changes of success

  • provides clear objectives

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Disadvantages of marketing planning?

  • time cost

  • money cost

  • human resource cost

  • plans may be inflexible and outdated

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What is a market segment?

A particular group of customers with similar characteristics and have similar needs or wants

<p>A particular group of customers with similar characteristics and have similar needs or wants</p>
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What factors can the target groups for a business be based on?

Consumer profiles:

  • demographic → age, gender, religion, ethnicity

  • geographic factors → location, climate

  • psychographic factors → status, hobbies, interests

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What is a mass market?

the market for goods that are produced in large quantities e.g., fast food, bottled water, chocolate

<p>the market for goods that are produced in large quantities e.g., fast food, bottled water, chocolate</p>
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What is a niche market?

the market for goods that are specialized and produced in small quantities e.g., luxury yachts

<p>the market for goods that are specialized and produced in small quantities e.g., luxury yachts</p>
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What are advantages of a mass market?

  • economies of scale → low cost of production and large amounts of goods being produced

  • large customer base

  • increased sales

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What are disadvantages of a mass market?

  • risk of takeover / high amounts of competition

  • no ability to charge high prices, as these aren’t specialized or high-quality goods

  • products don’t have a good quality → less customer satisfaction

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What are advantages of a niche market?

  • products are more customized → can be sold more expensively

  • less competition → lower threat of takeover

  • high customer satisfaction due to good quality → customer loyalty

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What are disadvantages of a niche market?

  • low brand recognition

  • limited customer base → only targets a specific market segment

  • few opportunities of economies of scale → high cost of production

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What is a brand/product position map?

Customer perceptions of a product or brand in relation to others in the market. These are useful for businesses as they can see where they are in quality, price, health etc. in relation to other brands

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Why is a unique selling point important for businesses?

They stand out from its competitors, eliminate competition and attract customers

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What is differentiation?

The act of distinguishing a business or its products from rivals in the industry

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What are advantages of differentiation?

  • businesses stand out from competitors and can eliminate competition

  • they can charge higher prices for their unique products

  • brand recognition and loyalty

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What are disadvantages of differentiation?

  • excessive differentiation can confuse consumers

  • costly because often the products are high quality