business theme 1

explain the meaning of marketing

identifying and satisfying customer wants and needs profitably

Why do you think most firms decide to review their

marketing strategy at fairly regular intervals?

● In order to ensure it still fits with objectives

● To evaluate whether it is working and how it could be improved.

what is meant by target marketing

The group of consumers with similar characteristics that the business is aiming its products and services at.

identify reasons why it is important for a firm to able to identify their target market

in order to price products properly, in order to be able to promote products effectively

explain how market segmentation helps businesses to improve their profitability

By segmenting the market they are able to offer different extension packages to different types of consumers, thus increasing added value and, ultimately, profit.

Explain how online advertising might help a

business to focus its advertising spending on its

target market.

It forces the business to consider which sites its target consumers might be on and focus its advertising spend on those particular sites.

what is a niche market

a specific market for a particular product or range of specific products that caters to a distinct group of customers

what is an example of a niche market

one example would be a washing machine market or a toothbrush market

what is a mass market

a mass market is a market that is used by a majority of people

what is an example of a mass market

an example of a mass market would be a car market as there are many types of cars around the world

what does homogenous mean

• Adjective of the same kind; alike.

• For example similar products that compete in a market e.g. different brands of yoghurt

how do you calculate the size of a market

• The size of the market is the TOTAL of all the sales of all the producers in that market

• This can be measured two ways:

  1. Volume of sales, or quantity of products sold e.g. 91 million burgers sold every year**

2. Value, total amount spent by customers e.g. The UK burger bar market is estimated to be worth £3.28billion

what is a market share

the amount of the market a business has in percentage

how do you calculate market share

what is a dynamic market

A dynamic market is one that is subject to rapid or continuous changes

what is an example of a dynamic market

shoe market as it is constantly changing, as you aren’t wearing the same shoes as you were as a child

how is the online market a dynamic market

Online retailing is a dynamic market because it is constantly changing, developing, expanding and offering customers new products and new ways to shop

what are some advantages of online retailing

• Shops are open round the clock so they don’t miss critical times when customers can shop e.g. evenings

• Orders can be taken automatically without the need for staff

• Shop can reach international markets easily

• Low overheads, no need for a shop premises

• Stock can be easily withdrawn or updated to keep up with dynamic market changes in tastes

• Easy to set up (eBay)

• Flexible – owner can be anywhere in world

• Opportunities for fast growth

what are some disadvantages of online retailing

• Issues with sending goods back may put customers off

• Issues with online security worries put off older customers and those not keen to share their bank details

• Very competitive market, hard to drive traffic to sites

• Owners need IT skills

• Problems with fraud / spam / viruses

• Competitors can be aware of owners business model, prices, activity

what is market growth

• With dynamic markets, comes constantly changing consumer tastes and preferences

how does competition benefit the consumer

businesses have competition to gain the most customers and try to stay above their competitors, meaning some business lower their prices to combat their competitors and therefore creates lower prices constantly for the customer.

what is a business risk

Business risk is the possibility a business will have lower than anticipated profits or experience a loss rather than taking a profit

Business risk is influenced by; raw material costs, competition, the overall economic climate and government laws e.g. minimum wage

what is an example of a risk

lack of job security- When a person starts a business they may leave behind a secure job, this means they may suffer stress and anxiety as a result. 

what is product orientation

• A business is product orientated when it only looks at the product or the production process when deciding what to make next

when is product orientation important

• There is little competition in the market, the business can make what suits its production capacity

• When there is limited consumer knowledge e.g. dental fixtures, braces etc.

• When there is low disposable income of consumers, when funds are limited customers will buy what is available

what is an example of product orientation

• Apple create iPhones and iPads and create innovative products, but they create and make what they can, not what consumers want

what is market orientation

Market orientation is a business philosophy where the focus is on identifying customer needs or wants and meeting them. When a company has a market orientation approach, it focuses on designing and selling goods and services that satisfy customer needs in order to be profitable

what is an example of market orientation

Audi cars- this is because on their website you are able to customise a car in their options for certain car models

what is primary research

Primary research is research the business conduct for themselves (or hire someone to do for them.) It involves going directly to a source – usually customers and prospective customers in the target market – to ask questions and gather information

what is an example of primary research

an example would be a questionnaire as it is in person and research gathered by the business

what is secondary research