Studied by 4 people
Customer base
the group of customers a business sells its products to
Market
all customers and consumers who are interested in buying a product and have the financial resources to do so
Target market
individuals or organisations identified by a business as the consumers of its products
Customer
an individual or business that buys goods and services from a business
Consumer
the final user of a product
Consumer markets
markets for goods and services bought by the final consumer
Industrial markets
markets for goods and services bought by other businesses to use in their production process.
Business environment
the combination of internal and external factors that influence the operations of a business
Free trade
no barriers exist that might prevent trade between different countries
Niche marketing
developing products for a small segment of the market
Mass marketing
selling the same product to the whole market
Market segment
a part of the whole market in which consumers have specific characteristics
Market segmentation
dividing the whole market into segments by consumer characteristics and then targeting different products to each segment
Geographic segementation
dividing consumers in the market by geographic area
Demographic segmentation
dividing consumers in the market by factors such as age, gender, income, ethnic background and social class.
Psychographic segementation
dividing consumers in the market by lifestyles, personalities and attitudes.
Market research
the process of collecting, recording, and analysing data about the customers, competitors and market for a product.
Unique Selling Point (USP)
The special feature of a product that sets it apart from competitors’ products/
Market-oriented
Products are developed based on consumer demand as identified by market research
Product-orientated
The firm decides what to produce and then tries to find buyers for the product.
Primary research
The collection of first-hand data for the specific needs of the firm
Secondary research
The collection of data from second-hand sources
Quantitative research
The collection of numerical data that can be analysed using statistical techniques.
Qualitative research
The collection of information about consumers’ buying behaviour and their opinions about products.
Sample
A representative sample of the target market selected to take part in market research.
Marketing mix
Four marketing decisions needed for the effective marketing of a product
Four Ps
The right product at the right price with the right promotion in the right place.
Product
A name, image or symbol that distinguishes a product from competitors’ products.
Brand image
The general impression of a product held by consumers
Product life cycle
The pattern of sales of a product from introduction to its withdrawal from a market.
Extension strategies
Marketing activities to extend the maturity stage of a product.
Price
The amount paid by the customer to the supplier when buying a good or service
Product quality
The product meets the needs and expectations of customers
Market skimming
setting a high price for a new product that is unique or very different from any other product on the market (e.g. technology products such as the latest TV or PlayStation)
Advantages:
Initial profit earned from market skimming is high
Disadvantages:
Businesses may need the large profit to pay back high costs of research and development of the product
Limited market penetration due to high prices
Penetration pricing
setting a low price to attract customers to buy a new product (e.g new products entering a highly competitive market such as snack foods or drinks)
Advantages
Rapid market penetration, allowing the business to quickly gain market share and establishing a strong customer base early on
Disadvantages
Customers become used to the low prices, if raised they may go to competitors instead.
Competitive pricing
setting a price similar to that of competitors’ products which are already established in the market
Advantages
Businesses with good brand image and customer loyalty utilise competitive pricing as their loyal customers will purchase their high quality brand and product over competitors
Disadvantages
Reduced profit margins as a result of low prices from competitors - the greater the competition, the lower the prices will be
Cost-plus pricing
The price is calculated by taking the unit cost of the product and adding a mark-up (e.g a loaf of bread costs $1.50 to make and is sold for $2.50 after the mark-up is added)
Advantages
Easy to calculate price and determine the quantity of sales needed in order to achieve a certain level of profit (for niche marketing)
Disadvantages
Doesn’t consider how much consumers are willing to pay, for example, consumers in some locations may be willing to pay a higher price
Doesn’t consider the prices of rival (competing) products, which may mean that it is not competitively priced
Psychological pricing
The price is made to seem cheaper than it actually is (e.g. $9.99 seems cheaper than $10)
Advantages
Customers feel like they’re getting good value for their money
Price seems less expensive to a customer
Disadvantages
The customer might be aware of the strategy and is put off by it (does not like being ‘deceived’)
Dynamic pricing
The price changes in real time in response to changes in market demand and supply (e.g. new products entering a highly competitive market such as snack foods or drinks)
Advantages
Businesses such as hotels and airlines which, are able to sell their products online, as prices can be changed easily
Business wishes to fully utilise spare capacity, which can be achieved by charging customers different prices
Disadvantages
Can’t be used for businesses with physical retail outlets, as the process of changing prices can be costly and complicated
Demand
the quantity of goods and services consumers are willing to buy
Price elasticity of demand
measures by how much demand (sales) for a product changes when there is a change in its price
Price inelastic demand
the percentage change in demand is less than the percentage change in price
Price elastic demand
the percentage change in demand is greater than the percentage change in price
Revenue
The amount earned by a business from the sale of its products
Channels of distribution
How a product gets from the producer to the final consumer
Wholesaler
a business that buys products in bulk from producers and then sells them to retailers
Retailer
shops and other outlets that sell goods and services to the final consumer
Middlemen
the intermediaries in the channels of distribution (e.g. wholesalers and retailers)
Direct selling
the product is sold by the producer directly to the final consumer without the need for any middlemen
Promotion
marketing activities used to communicate with customers and potential customers to inform and persuade them to buy a business’s products.
Advertising
Paid-for communication with consumers which uses printed and visual media. The aim is to inform and persuade customers to buy a product.
Informative advertising
information about the product communicated to consumers to create product awareness and attract their interest.
Persuasive advertising
communication with consumers aimed at getting them to buy a firm’s product rather than a competitor’s product
Below-the-line promotion
promotion that is not paid for communication but uses incentives to encourage consumers to buy.
Sales promotion
incentives used to encourage short-term increases in sales or repeat purchases.
Personal selling
sales staff communicate directly with the consumer to achieve a sale and form a long-term relationship between firm and consumer
Direct mail
printed materials which are sent directly to the addresses of customers
Sponsorship
payment by a business to have its name or products associated with a particular event
Marketing budget
the amount of money made available by a business for its marketing activities during a particular period of time
E-commerce
use of the internet and other technologies by businesses to market and sell goods and services to customers
Marketing strategy
a plan to achieve the marketing objectives using a given level of resources
Legal controls
Laws that control the activity of businesses
Barriers to trade
usually taxes, quotas or bans that one country places on the goods of other countries to prevent or increase the cost of them entering that country
Domestic market
the market for goods and services in the business’ own country
Joint venture
an agreement between two or more businesses to work together on a project
Note
Flashcard