Business Unit 2

exam prep

Marketing

Marketing

The exploration, creation and delivered value to satisfy the needs of a target market at a profit

Evolution of Marketing

Henry Ford believed that customers get what’s given but now customers choose what they want

Production Orientation

• (1860s–1920s)

• Anything produced can be sold

• Production costs low

• Little/ no promotion

Sales Orientation

• (1920s–1940s)

• People told what they want be companies

• Produce best product to sell to customer

• Convince people through sales people and advertising

Marketing department orientation

• (1940s–1960s)

• Products satisfy customer wants

• Research and produce only consumer needs

• Intense market research before product launches

Marketing company orientation

• (1960s–1990s)

• Business exists for customer

• Strategic and spans all business functions

• Targeted products

Relationship marketing

• (1990s–2010)

• Build relationships with customers

• Customer loyalty

• Customer relationship management (CRM) and data- mining

Social/mobile marketing

• (2010–present)

• Connected 24/7 with consumers

• Focus on social real time interactions

• Exchange information, influencers, digital platforms

Relationship marketing

The process of establishing, maintaining and enhancing long-term relationships with customers so that the objectives of both parties are met

Resource markets

Natural resources, sold to intermediaries, primary producers can sell directly to public

Industrial markets

Good, service or idea used to produce other products, classified as secondary or tertiary, products used in production process

Intermediate markets

Called wholesalers, break down large quantities from manufacturer to be sold, don’t sell directly to consumers unless a superstore (Costco, Bunnings)

Consumer markets

Called retailors, sell direct to end user, found in shopping centers, must understand consumer behaviour to be competitive, broken into three sections

Mass market

Product aimed at all consumers, does not break market into common characteristics, appeals to all, popular during production and sales era, common for food, petrol and utilities

Market segment

Breaks market through one key characteristic, like secondary schools

Niche market

A smaller section of a larger market segment, focusing on a select group of customers; also known as a concentrated or micro market

Intermediaries

Independent organisations within the distribution channel that make it possible for products to reach the end user

Primary producer

Involved in the resource market, cultivation of natural resources and the production and sale of raw materials. Output may be marketed in its raw state or sold as an input to another business.

Secondary producer

Involved in the industrial market, processing raw materials and manufacturing goods. This involves converting raw materials into partly processed or finished goods.

Tertiary producers

Involved in the provision of services, rather than production of goods. In the industrial market, these producers support the production and distribution process.

Wholesalers

Businesses that purchase goods from producers with an intention to on sell them to retailers

Retailers

Sell goods or services directly to the final consumer

Factors influencing consumer behaviour

Psychological factors - buying behaviours

• Motivation, perception, learning, attitudes, personality, self-concept

Socio-cultural factors - external influences on consumer buying behaviour

• Social class, culture, reference groups, family

Economic factors - changes in economic growth patterns over time

• Peaks, prosperity, recession, troughs

Government

• Economic policies, regulations

Unique selling proposition (USP)

A key factor that differentiates one product from another. It is the reason that one product or service is better than that of the competition – it is the competitive edge

Marketing objectives

In growth stage: increasing brand awareness and sales, gaining market share, brand loyalty and profit

Sales objectives

Attracting new customers, expanding sales to existing customers, increasing unit sales by 10% for a time, achieving sales revenue growth of 8% for a time

Sales forecast

The process of estimating future revenue by predicting how much of a product or service will sell in the next week, month, quarter, or year to make smart business decisions

Market share

A business’s share of the total industry sales for a particular product or service, often expressed as a percentage

Brand awareness

The extent to which consumers are familiar with the qualities or image of a particular brand of goods or services creating a competitive advantage

Target market

A group of actual and potential customers whose needs and wants a business wishes to satisfy

Segmentation dimensions

Groups of consumers that share similar characteristics

Demographic segmentation

A specific market, which can be based on age, gender, education, ethnicity, family, religion, occupation

Geographic segmentation

A market based on a particular country/ region, state within country, city size, climate, urban vs costal

Psychographic segmentation

A market based on lifestyle, socio-economic group, personality, motives, values/attitudes

Behavioural segmentation

Market based on user status (regular, first time), loyalty, purchase occasion, benefits sought, attitude to product

Differentiation

The ability of a business idea to deliver benefits that exceed those of competitor

Product positioning

Establishing, in the mind of consumers, the identifiable image and attributes of a product (or service) in relation to competing products

4P’s/ marketing mix

Product, price, promotion, place

Product

A product is a good, service or idea whose combined attributes, both tangible and intangible, satisfy consumer needs or wants. Product should have added benefits (e.g. safety stuff in cars)

Total product concept

When customers purchase products, they are buying both the tangible attributes and intangible benefits that make up the total product. This could include the packaging, branding, warranty and after-sales service.

Product line

A group of products that are closely related because they are intended for the same end use or same target market

Product portfolio

The total combination of products that a business sells

Packaging

Goes beyond protecting the product to convey an image and reinforce the positioning and branding strategy. Packaging can be used when segmenting the market by offering the same product in different sizes or forms to enhance usage

Price

The amount of money a consumer is willing to offer in exchange for a product

Market skimming

Charging the highest possible price in the short term to earn a high profit on each item sold and gradually decreasing it in the longer term

Penetration pricing

Charging a very low price in the short term to generate high sales volume and meet sales objectives of the business

Prestige and premium pricing

Price can communicate a strong message to the market about the value of the product: if the aim is to create a prestige brand, setting the price too low or adopting a penetration pricing strategy can undermine this. Works in niche markets

Competition-based pricing

Often used when there is a high degree of competition from businesses with similar products. In this situation, consumers may shop around and compare prices.

Cost-based pricing

Setting prices based on the costs for producing, distributing and selling on a per-unit basis. ‘Cost-plus’ pricing is typically used by retailers, who use the price they paid to the producer or wholesaler and add a percentage mark-up to create a profit margin

Loss leader

A good or service offered at a significant discount, often below cost price. Attracts more customers

Psychological pricing

Odd-even pricing ($14.95 vs $15), more expensive something is the better

Dynamic pricing

A strategy in which prices continuously adjust, sometimes in a matter of minutes, in response to real-time supply and demand. The aim is to manage the flow of customer traffic and sales to maximise sales revenue.

Promotion

Use of advertising, sales promotion, publicity, personal selling, digital, social and emerging platforms to communicate with consumers and create sales

Place

The means of getting a product into the hands of the customer. This involves distribution from where the product is made to the customers’ preferred place of purchase

Distribution channels

Distribution channels can be either direct to the consumer (producer–consumer) or indirect, as a product passes through intermediaries

Branding

The name, term, symbol, design or a combination of these that uniquely identifies a product and distinguishes it from the competition

Total product concept

When customers purchase products, they are buying both the tangible attributes and intangible benefits that make up the total product. This could include the packaging, branding, warranty and after-sales service.