Unit 4-Marketing

Marketing

The management process responsible for identifying, anticipating, and satisfying customer requirements profitably.

Market Orientation

A marketing strategy where a business focuses on outward-looking research to produce goods that consumers want.

Market Orientation Pros

Reduced risk of failure; more responsive to market changes; stronger brand loyalty.

Market Orientation Cons

High cost of market research; limits radical innovation (consumers don't know what they want yet); heavy competition in established segments.

Product Orientation

A marketing strategy where a business focuses on inward-looking factors like product quality and innovation rather than market research.

Product Orientation Pros

Focuses on high quality and technical expertise; can lead to "blue ocean" innovation; lower market research costs.

Product Orientation Cons

High risk of market rejection; ignores customer needs; may result in technically superior but obsolete products.

Market Share

The percentage of total industry sales that is accounted for by a specific business over a given time period.

Market Growth

The percentage increase in the total size of a market (measured in value or volume) over a period of time.

Market Size

The total sales volume or value of all businesses in a specific industry.

Market Leadership

A position held by the business with the largest market share in its specific industry.

Market Leadership Pros

Significant economies of scale; stronger bargaining power with suppliers; easier to attract top talent and investment.

Market Leadership Cons

Attracts heavy competition and "price wars"; high pressure to maintain innovation; subject to government anti-monopoly scrutiny.

Marketing Planning

The systematic process of formulating appropriate strategies and preparing marketing activities to meet marketing objectives.

Market Segment

A distinct group of customers with similar characteristics and needs within a larger market.

Market Segmentation

The process of splitting a market into distinct groups of buyers with similar needs or characteristics to target them specifically.

Market Segmentation Pros

Allows for targeted marketing mixes; helps identify untapped gaps in the market; enables businesses to charge higher prices for specific needs.

Market Segmentation Cons

Expensive to create multiple marketing mixes; small segments may not be profitable; risk of cannibalization between different brand segments.

Demographic Segmentation

Dividing the market based on population characteristics such as age, gender, income, and occupation.

Geographic Segmentation

Dividing the market based on location such as regions, countries, population density, or climate.

Psychographic Segmentation

Dividing the market based on lifestyle, values, and personality traits of the consumer.

Target Market

The specific group people with share characteristics whos needs/wants a business aims to cater to/fullfill

Targeting

The process of selecting one or more market segments to enter and focusing marketing efforts on those specific groups.

Mass Market

a broad market where standardized products are sold to a wide range of consumers with general needs, rather than a specialized segment

Segmented Marketing

A strategy where a business targets several market segments and designs separate offers for each.

Niche Marketing

A strategy targeting a highly specialized and small segment of a larger market with unique requirements.

Consumer Profile

A quantified picture of a business's typical customer, including age, income, and buying habits.

Product Positioning

The space a product occupies in consumers' minds relative to competing products based on attributes like price or quality.

Product Position Map

A visual tool that shows customer perceptions of a business's product relative to competitors across two variables.

Unique Selling Point (USP)

A distinctive feature of a product that differentiates it from all other competitors in the market, providing a competitive advantage.

Product Differentiation

The act of distinguishing a physical product from its rivals through unique features, design, or quality.

Product Differentiation Pros

Reduces direct competition; allows for premium pricing; builds brand loyalty.

Product Differentiation Cons

High R&D and design costs; competitor imitation is common; can be expensive to communicate uniqueness.

Service Differentiation

Distinguishing a business through superior customer support, delivery speed, or after-sales service.

Service Differentiation Pros

Harder for competitors to copy than physical features; increases customer retention; justifies higher service fees.

Service Differentiation Cons

Higher labor costs for staff training; difficult to maintain consistent quality; relies heavily on human performance.

Price Differentiation

Using different price points for the same or similar products to target different segments (e.g., adult vs child tickets).

Price Differentiation Pros

Maximizes revenue from different groups; increases total market share; makes products accessible to lower-income groups.

Price Differentiation Cons

Can lead to customer resentment; potential for "gray market" reselling; requires clear barriers between segments.

Distribution Differentiation

Using unique or exclusive channels to reach customers more effectively than rivals.

Distribution Differentiation Pros

Increases convenience for customers; provides exclusive "brand experience"; reduces power of traditional retailers.

Distribution Differentiation Cons

High setup costs for new channels; can alienate existing distributors; may limit reach if the channel is too niche.

Relationship Differentiation

Focusing on long-term engagement and personalized interaction with customers to build loyalty.

Relationship Differentiation Pros

Very high customer lifetime value; creates "brand advocates"; reduces sensitivity to price changes.

Relationship Differentiation Cons

Extremely time-consuming; requires sophisticated CRM technology; expensive to maintain personal contact.

Image/Reputation Differentiation

Using brand identity, ethics, or CSR to distinguish a business in the eyes of the consumer.

Image/Reputation Differentiation Pros

Creates a strong emotional bond with consumers; can survive short-term product failures; attracts ethical investors.

Image/Reputation Differentiation Cons

Takes years to build but can be destroyed in days by a scandal; high costs of ethical compliance; perceived as "greenwashing" if not authentic.

Sales Forecasting

A quantitative technique used to predict future sales levels over a given time period based on past data and market trends.

Sales Forecasting Pros

Aids in financial budgeting; helps human resource planning; optimizes stock level management.

Sales Forecasting Cons

Based on historical data which may not reflect the future; ignores unpredictable external shocks (STEEPLE); complex and time-consuming to calculate accurately.

Time Series Analysis

A statistical technique used to identify underlying patterns in sales data over a specific period of time.

Trend

The long-term underlying movement in a time series data set, ignoring short-term fluctuations.

Seasonal Fluctuations

Periodic variations in sales that repeat at regular intervals within a year (e.g., summer clothing).

Cyclical Fluctuations

Variations in sales linked to long-term economic cycles (e.g., recession or boom) that last longer than a year.

Moving Average

A method used to smooth out data fluctuations to identify the underlying trend more clearly.

Extrapolation

The mathematical process of projecting a past trend into the future to predict sales.

Variation

The difference between actual sales and the trend value identified through moving averages.

Market Research

The process of collecting, recording, and analyzing data about customers and competitors to aid marketing decisions.

Primary Research

The collection of first-hand, original data specifically gathered for the current needs of the business.

Surveys

A research method using structured questionnaires to gather data from a large sample.

Surveys Pros

Can reach a large audience; easy to analyze statistically; cheap if conducted online.

Surveys Cons

Low response rates; risk of biased or misunderstood questions; lacks qualitative depth.

Interviews

A research method involving one-on-one discussions to gather detailed qualitative information.

Interviews Pros

Allows for in-depth data; questions can be clarified; allows for non-verbal observation.

Interviews Cons

Highly time-consuming; expensive to conduct; risk of interviewer bias.

Focus Groups

A method where a small group of people discusses a product or concept guided by a moderator.

Focus Groups Pros

High qualitative depth; allows for group interaction to trigger new ideas; quick feedback.

Focus Groups Cons

Dominant individuals may influence others; small sample size is not representative; social pressure to agree (groupthink).

Observation

A method of watching how people behave in a natural environment without direct interaction.

Observation Pros

Records actual behavior rather than stated intentions; minimizes respondent bias; highly accurate for physical actions.

Observation Cons

Does not explain the "why" behind behavior; can be ethically questionable; high cost of specialized observers.

Secondary Research

The collection of pre-existing data that was originally gathered for a different purpose.

Place

Distribution channels used to deliver products to customers.

People

Employees who interact with customers and affect service quality.

Processes

Systems used to deliver products or services efficiently.

Physical Evidence

Tangible elements that help customers evaluate a service.

Product Portfolio

The range of products or brands owned by a business.

Price Skimming

Setting a high initial price and lowering it over time.

Price Skimming Pros

High initial profits; recovers development costs quickly; creates premium image.

Price Skimming Cons

Low sales volume; attracts competition; limited market size.

Penetration Pricing

Setting a low initial price to gain market share quickly.

Penetration Pricing Pros

Rapid market share growth; high sales volume; discourages competitors.

Penetration Pricing Cons

Low profit margins; difficult to raise prices later; may damage brand image.

Promotional Pricing

Temporary price reductions to boost sales or clear stock.

Promotional Pricing Pros

Increases short-term sales; clears inventory; attracts customers.

Promotional Pricing Cons

Reduces profit margins; customers may wait for discounts; damages long-term pricing perception.

Mark-up Pricing

Adding a fixed percentage of profit to the unit cost of production to determine the selling price

Mark-up Pricing Pros

Simple to calculate; ensures profit; covers costs.

Mark-up Pricing Cons

Ignores customer demand; ignores competitors; may misprice products.

Loss Leader

Selling a product below cost to attract customers.

Loss Leader Pros

Increases store traffic; boosts sales of other products; competitive advantage.

Loss Leader Cons

Loss on item; customers may only buy discounted goods; risk of overall loss.

Predatory Pricing

Setting very low prices to drive competitors out of the market.

Predatory Pricing Pros

Eliminates competition; increases long-term market power; deters entrants.

Predatory Pricing Cons

Often illegal; short-term losses; regulatory risk.

Premium Pricing

Setting high prices to reflect brand quality and exclusivity.

Premium Pricing Pros

High profit margins; strong brand image; attracts wealthy customers.

Premium Pricing Cons

Limited market size; high quality expectations; vulnerable in downturns.