BM topic 4 - key terms and formulae

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Market orientation

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14 Terms

1

Market orientation

An approach to marketing that focuses on meeting the specific demands of customers. Thus, the businesses focus on making products they can sell and that customers would want.

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2

Product orientation

An approach to marketing that focuses on making products a business knows how to make well, prioritizing R&D over market research, rather than concentrating on the needs and desires of potential customers.

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3

Market share

Refers to the sales revenue that an organization accounts for within a given market or industry. It is measured by expressing the firm’s sales revenue as a percentage of the whole industry’s sales revenue: (Firm’s sales / Total sales in the market) x 100

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4

Product

As aspect of the marketing mix, this is a physical good or intangible service provided by a business.

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5

The product life cycle

R&D, launch, growth, maturity, and decline.

<p>R&amp;D, launch, growth, maturity, and decline. </p>
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6

Pricing methods

  1. Cost-plus: Adding a profit margin to the cost of production to determine price.

  2. Penetration: Setting a low price in order to enter an industry.

  3. Loss leader: Pricing below cost of production to attract customers who will also purchase products with higher profit margins.

  4. Predatory: Charging a low price, even below cost of production, to damage the sales of rivals. Typically done to prevent new entrants into the industry.

  5. Premium: Consistently charging a high price because of the associated image of the brand with high-quality products.

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7

Above the line promotion

Refers to paid-for marketing communications through the use of independent mass media: television, radio, cinemas, billboards, magazines and national newspapers. Hence, control and responsibility of this promotion is passed to another organization.

The main advantage of using ATL promotion is the potential to reach a very large audience of potential customers.

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8

Below the line promotion

Refers to marketing activities which the organization has direct control over. It is aimed directly at a targeted audience instead of a general audience

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9

Distribution

The process of getting the product to the customer.

  • Zero-channel distribution network: zero intermediaries

  • One-channel distribution network involves the use of a single intermediary, such as an agent or retailers.

  • Two-channel distribution network involves the use of two intermediaries, usually wholesalers and retailers.

  • Three-channel distribution network uses three intermediaries, often involving an agent who sells the goods to wholesalers on behalf of the producer. In turn, wholesalers sell to retailers.

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10

People

An aspect of the marketing mix, this refers to the importance of employee-customer relations.

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11

Process

An aspect of the marketing mix, the way in which a service is provided or delivered to customers

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12

Physical evidence

An aspect of the marketing mix that refers to the tangible aspects of a service, such as the physical appearance or tangible aspects of a restaurant, coffee shop, retail outlet, school or hotel. Has a direct impact on customers’ perceptions of a business and the quality of the services it provides.

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