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Marketing
Anticipating, identifying, and satisfying the needs and wants of the market, in a profitable manner
Market Needs
Things people need in order to survive. Necessities rather than human desires.
Market Wants
What people would like to have, or have more of. Wants are unlimited which creates huge marketing opportunities for businesses.
Market Share
Sales revenue that a organization accounts for within a given market or industry. It is measured by expressing the firms sales revenue as a percentage of the total industrys sales revenue.
(Firms sales/total sales in the market) * 100
Market Growth
An increase in the size of a market in, usually measured by the rise in total sales revenue of the market or industry. Measures consumer demand for a product or service category overtime.
(market size p2 - market size p1/ market size p1) * 100
+ Growing market
- Shrinking market
Market-Orientation
An approach to marketing that focuses on meeting the specific desires of customers and potential customers. Businesses focus on making products they can sell, rather than selling products that they can make.
Product-Orientatoin
An approach to marketing that focuses on making products a business knows how to make, rather than concentrating on the needs and desires of customers and potential customers. Businesses prioritize research and development and product orientation is highly innovative and used by tech-savvy manufacturers.
Marketing plan
A detailed marketing plan gives managers and employees a clear focus and direction. It enables the business to formulae appropriate marketing strategies in order to meet the marketing goals of the organization.
Market Segment
Individual subgroups of a large market. They consist of similar or common characteristics.
Market Segmentation
The process of dividing the market for a product into smaller or distinct groups of customers in an effort to meet the specific desired wants and needs.
Demographic Segmentation
Splitting consumers according to characteristics of the population. This includes age, gender, family size, religion, and ethnicity
Geographic Segmentation
Splitting consumers based on their different geographic locations. This includes climate, population density, home improvement, and even sports.
Physiological Segmentation
Splitting consumers according to their lifestyle choices and personal values. This includes social classes, interests, values, and even being vegan for example.
Socio-Economic Segmentation
Splitting consumers according to consumer or household income levels. This is often linked to their type of profession and level of education.
Target Market
A clearly identifiable group of customers that an organization focuses its marketing effort on. Customers in the same target market have unique needs, tastes, and preferences.
Niche Market
Marketing approach that focuses on supplying highly specialized products to cater a small and select target market
Mass Market
A marketing approach that focuses on supplying to wide-ranging groups of customers in a market without having to split them into separate market segments. Products supplied are standardised and are to cater for large consumer markets.
Unique Selling Point (USP)
A products “exclusive feature” that differentiates it from competing products in the same industry. A reason this is important is because it can aid creating a competitive advantage within rival businesses.
Product Position Map (Perception Map)
Graphical Illustration of, “Customer Perceptions,” of a business, its products, and or brands, in comparison to other firms in the industry. It is based on two predetermined criteria: Price and Quality
Porters Generic Strategies
A strategic planning tool that outlines the ways in which a business can access the different ways it can compete, to gain a competitive advantage. There are 3 generic strategies that any business can use to sustain a competitive advantage: cost leadership, differentiation, focus
Competitive Advantage
any factor that enables a business to be more appealing to customers, such as a USP, or being able to produce goods and services at a better or cheaper rate than rivals. This can contribute to higher profit margins and attract customers quickly.
Cost leadership
aims to establish a competitive advantage by achieving the lowest operational cost in the market for a particular good or service. This can be done by many methods such as economies on scale (lowering unit cots of production), and relocation (to lower transport and distribution costs.)
Differentiation
When a firm makes its mass-market products distinct from those of its competitors. Hence, attention is on the quality of the product, rather than the cost of the product.
Differentiation Focus
Involves offering specialized products within the niche market. It can be a highly profitable strategy due to high prices that can be charged
Cost Focus
Involves being the lowest cost competitor within the market niche. Costs can be kept low by concentrating on a limited number of people or focusing on a small geographical area.
Consumer Products
Products purchased by private individuals for their own personal use
Industrial Products
Goods purchased for commercial use. Used in the production process to help the running of the business.
Research and Development
Investigating, Designing, and Developing a product before its launched onto the market for sale. It is costly and requires high investment.
Launch
When the product is introduced to the market. Early adopters will buy the product, but most customers will not be aware of the new product so advertising and promotion are vital to boost and sustain sales.
Growth
Sales revenue increases as the product becomes known in the market and firms gain market share. Competitors may set in at this stage.
Maturity
Sales revenue peak on plateau, as sales growth slows and the firms contend with rivals. Sales become saturated so the firm relies on differentiation strategies and extension strategies to prolong the life cycle of mature products.
Extension Strategies
Marketing approaches used to lengthen the product life cycle. They are used as a firm enters or is in its decline stage of its product life cycle because the market is saturated.
Branding
A marketing technique used to give a product or business a unique name or identity. This can help accomplish a good brand reputation which helps an organization gain or sustain competitive advantages
Brand Awareness
The extent to which potential and existing customers know about, recognise, and remember an individual brand. It is an important aspect of any product strategy because all business strive to gain new customers.
Brand Development
A firms marketing strategy in communicating the value of the brand and what the brand stands for. Brand development increases sales by making more people attracted to the brand.
Brand Loyalty
Exists when a customer repeatedly buys the same brand. A high degree of brand loyalty means that customers do not like to switch to a rival brand.
Brand Value
Expected earning potential of a brand. Brand Value is an intangible fixed asset which can be enhanced by brand awareness, brand development, and brand loyalty.
BCG Matrix
A visual marketing management tool used to analyze a firms product portfolio. It is used to place a firms products according to its market share and market growth.
Price
The value of a good or service that is paid by the customer. Price will usually cover the costs of production, allowing the business to earn a profit.
PED
Measures the % change of QD, following a % change in price, when all other factors remain the same. Knowledge of PED enables producers to gain from dynamic pricing.
Cost Price
Refers to adding a mark up to the average cost of producing a product. This ensures the selling price is higher than the production costs.
Penetration Pricing
Setting a low price to enter an industry. It allows firms to compete against existing firms and to gain market share.
Loss Leader
Pricing a product below its costs of production to attract customers to purchase other items at the same time. Loss leaders are non sustainable in the long run so are often offered for a limited time period only.
Predatory Pricing
Charging a low price, sometimes even below the costs, to damage sales of its rivals. It is used by established market leaders to restrict new entrants, thereby limiting competition.
Premium Pricing
Strategy where a firm sets a high price for its products. This is usually substantially higher than its competitors’s products to give the impression that the firms product is superior.
Dynamic Pricing
Firms strive to determine optimum prices at different periods of time. Prices are based on the ability and willingness of customers to pay at a specific time for a good or service.
Competitive pricing
Businesses set their prices based on what rivals are charging. It is suitable in highly competitive markets where products all have very similar attributes and functions.
Contribution Pricing
Setting the price greater than the per unit variable cost of production to ensure that a positive contribution is made towards the firms fixed costs. A firm must have a positive contribution to have any chance of earning a profit.
Place
Refers to the plans and processes of getting the right products to the right customers at the most convenient and cost-effective way at the right time. The more widely available a product is, the more likely it will sell, as place is about providing convenience to customers.
One level
Zero level
Two level
Distribution channels
uses a single intermediary
does not use any intermediaries
uses two intermediaries
Direct Distribution
Involves the producer selling the product directly to the consumer without the use of an intermediary.
Agents
Specialised individuals who act like intermediaries in the distribution channel. They can represent producers, wholesalers, and retailers in getting products to consumers.
Retailers
Commercial businesses that sell a manufacturers products directly to customers. Retailers often have multiple stores, offering customers with a variety of choice and convenience.
Wholesalers
Wholesalers buy their products in large quantities direct from manufacturers and other suppliers and act as a break of bulk point, reselling the goods in smaller quantities to retailers and other customers. Smaller retailers benefit from being able to buy smaller quantities of the goods from the wholesaler.
Promotion
The marketing process used to inform customers about a product and persuading them to purchase the product. It is about the communication methods used to raise customers awareness and interest in a product.
Above the line production
Mass media is used to promote brands and reach out to the target consumers. This communication is targeted to a wider spread of audience and is not specific to individual consumers.
Below the line production
Non-mass media used to promote brands and reach out to target consumers. This communication is personal and targeted to specific individual consumers.
Through the line promotion
An aspect of promotion that relies on the use of combining both ATL and BTL promotional strategies. It enables customers to engage with the product/brand in different ways.
Social Media Marketing
The use of online content that users can upload to a website using a suitable medium. It enables users to use social media platforms to directly promote their goods and services.
Decline
Sales revenue continually declines leading to the eventual withdrawl of the product. This is due to the changing fashions, habits, and tastes due to technological advances and research and development, which make the product obsolete.
Product Life Cycle
Marketing theory showing the different stages that most products go through from their research and development (R&D) stage to their final removal from the market. There are typically five stages in the product life cycle: development, introduction, growth, maturity, and decline
