Business Management HL: Unit 4 - Marketing

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Marketing

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Tags and Description

Covers sections 4.1, 4.2, 4.3, 4.4, 4.5 & 4.6,

83 Terms

1

Marketing

links the business to the customer by identifying/meeting the needs of customer’s profitability. It does this by promoting the right product at the right time to the right customers.

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2

Market Orientation

Outward looking approach; establishing consumer demand through market research before producing and selling a product. This ensures that the product will sell well because the business know it is what their customers want.

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3

Product Orientation

Inward looking approach; focusing on making the product first before attempting to sell it. Businesses usually do this when they believe that people need their product.

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4

Market share

the percentage of sales in the total market sold by one business
Firms sales in a given time period x100
Total market sales in time period

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5

Market growth

percentage change in the total size of a market (volume or value) over a period of time
market size(2nd year)-market size(1st year)
market size 1st year

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6

Market leadership

a firm with the largest market share in a given market

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7

Importance of market share

provides useful insights into the firm’s revenues, growth and profit margins

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8

Role of market planning

document outlining the firm’s marketing strategies to be used in order to achieve these objectives. usually developed after the conduct of a marketing audit

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9

Segmentation

a distinct group of customers with similar characteristics such as age, gender and similar wants or needs

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10

targeting

means that each distinctive market segment can have its own marketing mix

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11

positioning

analysing consumer perceptions of current brands

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12

niche market

a narrow, smaller or more specific market segment

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13

mass market

a large or broad market that ignores specific market segments

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14

Importance of having a USP

Helps establish a firm’s competitive advantage, builds customer loyalty, improves revenue and makes the product/service easy to sell

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15

How can organisations differentiate themselves and their products from competitors

  • Product differentiation

  • Service differentiation

  • Price differentiation

  • Distribution differentiation

  • Relationship differentiation

  • Image/reputation differentiation

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16

sales forecasting

uses quantitative methods to try predict a firms future sales

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17

advantages of sales forecasting

  • accurately predicting sales reduces uncertainty

  • helps manage stock and cash flow

  • aids in the decision making process

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18

disadvantages of sales forecasting

  • time consuming

  • ignores qualitative external factors (political, social, economic)

  • the entry of competitors into a market may be unforeseen

  • may be based on present technology which can be rendered obsolete due to technological processes

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19

why organisations carry out market research

  • To identify consumer’s needs and wants

  • To assist a business in predicting what is likely to happen in the future

  • To reduce risk of product failure

  • To measure effectiveness of a marketing strategy

  • To provide latest information on activities happening in the market

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20

how organisations carry out market research

Primary and secondary market research

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21

surveys

questionnaires sent to specific target audiences to gather first-hand information

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22

interviews

bringing in a selection of people to interview in order to gain information. They can be conducted one-on-one, telephone or online

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23

focus groups

small groups brought together to discuss a product or idea

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24

observations

getting information by carefully watching a trying to understand certain things or people’s behaviour

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25

market analyses

commercial publications or market intelligence reports that gather data about particular markets. highly detailed reports usually conducted by specialist market research agents

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26

academic journals

publications of scholarly articles written by experts. Experts usually include professors, graduate students or others with first-hand experience

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27

government publications

documents produced by the government that provide an official record of government activities and cover a wide variety of topics. issued locally, regionally or nationally.

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28

media articles

texts written and submitted for publication. e.g. newspapers & magazines

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29

online content

gathering information from the internet or websites

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30

qualitative research

information that relies on non-numerical data such as quality, opinion and characteristics

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31

quantitative research

information that relies on numerical and/or measurable data

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32

quota sampling

segmenting a given population into a number of groups that share certain characteristics

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33

random sampling

every member in the population has an equal chance of being selected, since the sample in chosen randomly

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34

convenience sampling

research groups are selected based on their easy access and proximity to the researcher.

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35

7 Ps of marketing

  • Product

  • Price

  • People

  • Place

  • Physical Evidence

  • Promotion

  • Processes

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36

Product (7 Ps)

a good or service that is offered in a market. Can be tangible or intangible and aims to satisfy the needs and wants of consumers

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37

Product life cycle

Different stages that a product is likely to go through from its initial design and launch to its decline

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38

product portfolio

includes all the products or services provided by an organisation

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39

marketing mix

set of controllable variables that a company uses to influence and meet the needs of its target customers in the most effective and efficient way possible.

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40

Extension strategies

attempt by firms to stop sales from falling by lengthening or extending the product’s life cycle

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41

Extension strategies include…

  • selling existing products into new markets

  • finding new uses for the product

  • changing the product’s packaging

  • targeting different market segments

  • developing new promotional strategies

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42

investment

the act of buying an asset to make a profit from its use

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43

profit

the money you have left after paying for business expenses

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44

cash flow

a measurement of the amount of cash that comes into and out of your business in a particular period of time

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45

branding awareness

the ability of customers to recognise the existence and availability of a firm’s good or service

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46

branding development

any plan to improve or strengthen the image of a product in the market.

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47

brand loyalty

when customers become committed to a firm’s brand and are willing to make repeat purchases over time.

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48

brand value

how much a brand is worth based on its reputation, potential income and market value. it is the extra money a business can make from its products because of its brand name

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49

the importance of branding

gives customers a clear image with which they can associate the business

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50

Price (7 Ps)

the only P concerned with profit. the money customers pay for having or using a good or service.

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51

Cost-plus (mark-up) pricing

adding a mark-up to the average cost of producing a product

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52

Penetration pricing

setting a low initial pricing and increasing over time. aim is to get a large number of customers quickly

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53

Loss leader

company sells at below their average costs with the aim to attract customers so they will buy something else

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54

premium pricing

sustained substantially higher prices than competitors to give the impression of superiority

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55

predatory pricing

eliminates any opposition by putting your prices lower than your competitors average costs to drive them out of business (illegal)

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56

Dynamic pricing

firms change pricing on an on-going basis in response to an on-going supply and demand

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57

Competitive pricing

taking into account what your competitors are doing

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58

Contribution pricing

calculating the variable cost per unit and setting the price above that

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59

Price elasticity of demand

measures how much demand for a product changes when there is a change in price.

Change in quantity = new q - original q
original q

Change in price = new p - original p
original p
PED >±1 = price elastic
PED <±1 = price inelastic
PED =±1 = unit elasticity

<p>measures how much demand for a product changes when there is a change in price.</p><p>Change in quantity = <u>new q - original q</u><br>                                           original q</p><p>Change in price = <u>new p - original p</u><br>                                      original p<br>PED &gt;±1 = price elastic<br>PED &lt;±1 = price inelastic<br>PED =±1 = unit elasticity</p>
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60

Promotion (7 Ps)

Doing what competitors do but bigger, better, faster, cheaper, etc.

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61

Above the line promotion

paid for communication that uses mass media. the control or responsibility is passed onto another organisation.
e.g. TV, radio, internet

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62

Below the line promotion

direct control over the promotional activities. focuses on promotional activities to a specific group of customers.
e.g. personal selling, public relations, sales promotion

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63

Through the line promotion

mixture of above and below the line. aim is to gain greater brand awareness & visibility.
e.g. TV advert released followed by magazine adverts

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64

social media marketing as a promotional strategy

uses social networking websites to market a firm’s product. incorporates the use of technological concepts and techniques with the aim of growing a business through different media.

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65

Place (7 Ps)

how the product reaches the intended user. it is concerned with how the product is distributed to make it available to consumers

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66

Channel of distribution

the path taken by a product from the producer or manufacturer to the final consumer

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67

Zero intermediary channel

when a product is sold directly from the producer to the consumer.
e.g. airline ticket booking

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68

One intermediary channel

involves the use of one intermediary (such as a retailer or agent) to sell the products from the producer to the consumer. usually working on a large scale or with expensive products.
e.g. selling jewellery through retailers

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69

Two intermediaries channel

when two intermediaries (usually wholesaler and retailers) are used by producers to sell the product to the consumer. particularly useful when selling goods over large geographical distances.

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70

One intermediary channel advantages & disadvantages

Advantages:
- Promotion and customer service are done by the retailer
- The cost of holding stock is incurred by the retailer
- Retailer assists in selling the product at convenient places to consumers

Disadvantages:
- Retailers profit mark-up is included in selling price, so product may be expensive for consumers
- The producer may not be aware of the promotional strategy used by the retailer

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71

Zero intermediary channel advantages & disadvantages

Advantages:
- Cheap
- Fast
- Ideal for perishable products
- Producer is key decision-maker

Disadvantages:
- Promotion is done by producer, which can be time-consuming and expensive
- Producer incurs all storage and delivery costs

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72

Two intermediary channel advantages & disadvantages

Advantages:
- Wholesaler incurs storage costs which reduces costs for producer
- Wholesaler breaks the bulk for retailer by providing large quantities in smaller batches
- Appropriate when selling over long distances

Disadvantages:
- Two profit mark-ups could lead to a more expensive product offered to consumers
- This channel further reduces the producer’s responsibility for promoting products

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73

People (7 Ps)

selecting, recruiting, hiring and retaining the correct staff with the right skills and abilities for the production and sale of a good/service

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74

importance of employee-customer relationships in marketing a service

they are the face of the company which makes their relationship vital for maintaining a good image. often purchasing experiences can be effected often by the people we purchase from

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75

Processes

procedures & policies dealing with how an organisations product is provided and delivered.

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76

Direct processes

add value at the customer interface as the customer experiences the service

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77

Indirect processes

support the service before, during and after it has been consumed

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78

Physical evidence

the tangible or visible touch points that are observable to customers.

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79

importance of tangible physical evidence in marketing a service

many customers like to touch, smell, see, etc products before they purchase since it can act as a point of differentiation.

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80

Benefits of a 7 Ps marketing mix model

  • brings together marketing ideas and concepts in a simple manner, making it easier to market a good/service

  • assists businesses in strategy formulation all the way to strategy implementation

  • allows business to vary its marketing activities based on customer needs, resource availability and market conditions

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81

Drawbacks of a 7 Ps marketing mix model

  • misses out on addressing issues related to business productivity

  • can become complicated when adding the extra 3 Ps (people, processes, physical evidence)

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82

Opportunities of entering and operating internationally

  • larger market (greater reach & expands customer base)

  • diversification (spreads risks by investing in other countries)

  • enhanced brand image (makes business seem more “successful”)

  • gaining economies of scale (reduces average cost of production and makes business more competitive)

  • forms business relationships (may offer better prices for inputs)

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83

Threats of entering and operating internationally

  • economic challenges (fluctuating exchange & interest rates)

  • political challenges (governments easily change regulations)

  • legal challenges (consumer protection laws and intellectual property rights)

  • social challenges (disparities in countries)

  • technological challenges (LEDCs lack infrastructure, internet and communication systems)

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