IB Business Management HL UNIT 4 | Quizlet

Market Orientation

A firm that is market oriented will look to the market to see what consumers need and want.

Product Orientated Firms

A firm that is product oriented will look at what they can make instead of making products that they can sell.

What is marketing?

To identifying the needs and wants of customers.

Anticipate and predict what customers want in the future.

Considering the price, product, place and promotion

Earning a profit

Advantages and disadvantages of market oriented

firms

ADV

Greater flexibility

Able to respond quickly to the changes in the market because of its use of market information

Lower risk

Firms can be confident their products will sell as they are tailored to meet the needs and wants of consumers.

DISADV

Market research is needed

This is to find out what consumers want. This can be very expensive.

No guarantee this approach will work

This is due to the dynamic nature of the external environment.

Advantages and disadvantages of product oriented

firms

ADV

Quality can be assured

More control over operations

DISADV

Needs of the market are generally ignored

High risk strategy with high failure rate

High research and development costs

Market share

Market share refers to an organization's share of the total value of sales within a specific industry.

CALCULATION

Market share = ( firm sales revenue / industry sales revenue ) x 100

The importance of market share

Firms with high market share benefit from their status, price setting abilities and are less threatened by competition.

Market growth

Market growth refers to the rate at which the size of a market is increasing

CALCULATION

Market growth rate = (( current market size - original market size ) / original market size ) x 100

Market leadership

Market leadership refers to the position of the business having the largest market share in a given market.

Benefits of being a market leader

Premium pricing

Economies of scale

Longer product life cycles

Favorable distribution terms

Greater publicity and brand exposure

Easier to attract and recruit highly qualified employees

Extrapolation

Identifies the trend by using past data extending this trend to predict future sales.

Time series analysis

A forecasting method that uses historical sales data to discover patterns in the firm's sales over time and generally involves seasonal, random, and cyclical variations from economic booms and slumps.

Cost-plus (markup) pricing

adding a percentage markup to the cost of the product

Selling price = Cost + profit margin

Penetration pricing

Setting a low initial price on a new product to appeal immediately to the mass market

Loss leader

An item priced at or below cost to draw customers into a store.

Predatory pricing

The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market

Premium pricing

Pricing the highest-quality or most versatile products higher than other models in the product line

Dynamic pricing

The practice of changing prices for products and services in real time in response to supply and demand conditions

Competitive pricing

Occurs when producers sell products at lower prices to lure customers away from rival producers, while still making a profit

Contribution pricing

A method of pricing where the price charged is based on the variable costs of production.

All direct costs + all allocation of indirect costs = selling price

Price elasticity of demand (PED)

Measures the degree of responsiveness of demand for a product due to a change in the price of a product.

Price elastic (experience a large change in demand when there is a small change in price)

Price inelastic (experience a small change in demand when there is a change in price)

% change in quantity demanded / % change in price

Publicity

This is the process of promoting a business and its products by getting media coverage without directly paying for it.

Celebrities are often given free products from businesses in the hope they will be photographed using them publicly.

Public relations (PR)

This refers to marketing activities aimed at establishing and protecting the desired image of an organization.

The goal of PR is to get the media to report events in a positive way from the point of view of the business.

Examples of PR events:

Product launch parties

Press conferences

Radio, podcasts and interviews on news and talk shows

Book signings

Making prominent donations

Methods of promotion

Above the line ATL)

This is any form of paid-for promotional method through independent mass media sources.

Below the line (BTL)

This is the use of non-mass media promotional activities, allowing the business to have direct control.

on

Through the line (TTL)

This is the use of strategies that involve both ATL and BTL methods in an integrated marketing approach

Importance of branding

Branding can bring many advantages to a business which include:

Acting as a legal instrument

Risk reduction

Image enhancement

Earning higher revenues

Premium price setting ability

Recognition and loyalty

Distribution benefits

Brand value

This refers to the premium that customers are willing to pay for a brand name over and above the value of the product itself.

The benefits of having a strong brand value include:

Higher market share

Higher barriers to entry

Premium prices

Brand loyalty

This occurs when customers buy the same brand time and time again. They are devoted to the brand since they have a preference over other brand names.

The opposite is brand switching where customers turn to alternative brands.

Brand awareness

This measures the extent to which potential customers, or the public, recognises a particular brand.

Brand awareness can benefit the business by bringing:

Higher sales revenues

Competitive advantages

Repeat purchases

Brand development

This refers to the marketing process of improving and enlarging the brand name.

Successful brand development helps to extend the product's life cycle.

Some brands are so famous they are often mistaken for the name of the product itself.

Market research

The process of systematically gathering data from consumers, which can be used to influence business decisions

Marketing

The aim of marketing is to help identify, anticipate and satisfy consumer needs and wants profitab

Niche markets

Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market

Mass markets

In mass markets, products are aimed at broad market segments.

Prduction usually happens on a small scale

Mass marketing occurs when businesses selltheir products to most of the available market

Production usually happens on a large scale

Oligopolies

a state of limited competition, in which a market is shared by a small number of producers or sellers.

Low market concentration

A low market concentration is where market share is spread across marketleaders and smaller competitors

These markets tend to be more competitive

High market concentration

A high market concentration is where market leaders have a very high combined market share

These markets are not very competitive

Market leadership advantages

Brand Recognition

Economies of Scale

Innovation and Resources

Distribution channels

Competitive advantage

Attractive to highly-qualified job applicants

But they often face significant pressure

Market planning

Marketing planning is the process of formulating marketing strategies and tactics that will help a business achieve its marketing objectives

Three tools of marketing planning include

Market segmentation

Market mapping

Market positioning

Marketing Objectives (SMART)

These are specific SMART (specific, measurable, achievable, relevant, and time-bound) goals and include

Increasing market share

Maximising sales revenue in a particular region or for a certain product

Achieving distribution targets

Improving brand awareness

Marketing Resources

Planning which resources are required and where they will come from

This may include finance, staff time and expertise, as well as the capital expenditure require achieve the marketing objectives

Marketing Research

Marketing research identifies the factors expected to impact upon the marketing plan, such as...

Market size and growth

Market segments

Competitor positioning

Customert astes, preferences and views

The nature of distribution channels

The marketing mix

The marketing mix

This involves planning the medium- and short-term marketing activities the business intends to undertake and who is responsible for them, including...

Pricing strategies and tactics

Promotional activity

Distribution and logistical plans

Product specifications, features and packaging

Physical evidence such as branding

How people and process are developed to support delivery ofthe rest of the marketing mix

Market Segmentation

Market segmentation is the process in which a single market is divided into sub markets or 'segments'

Each segment represents a slightly different set of consumer characteristics

Firms often segment their markets according to factors such as social status, geographical location, religion, gender, or lifestyle

A target market is one or more market segments at which a product or service is primarily aimed

Unique Selling Point (USP)

A unique selling point(USP) is a distinguishing factor or characteristic of a product, service or brand that sets it apart from its competitors

The USP helps a business to differentiate itself and give customers a reason to choose

Developing a brand identity

Achieving a competitive advantage over rivals

Effective communication with customers

The attraction and retention of customers

Achieving power over pricing

Encouraging innovation and adaption

Methods of differentiation

Marketing and branding, packaging, functions and features, customisation, customer service.

Secondary market research

Secondary market research is when a company uses existing information from other sources, like reports, articles, or surveys, to learn about its market and customers.

Government statistics, organisational bodies, and the internet.

Primary market research

Primary research is research you conduct yourself (or hire someone to do for you.)

Surveys, interviews, observations, and ethnographic research.

Extension Strategies

Extension strategies referto the techniques used by businesses to extend the life of a product

beyond its natural life cycle

These strategies are designed to boost sales and maintain profitability for a product that has reach

the decline stage of its life cycle

There are two types of extension strategies:

Product-related extension strategies

Promotion-related extension strategies

Product-related extension strategies

These extension strategies involve changing or modifying the product to make it more appealing to customers and extend its life cycle and can be achieved in one of three ways:

Product improvements with upgraded features and improvements to the previous model

Line extensions e.g. Coca-Cola introduced Diet Coke and Coke Zero as line extensions of its original Coca-Cola

Repositioning e.g. when IBM's personal computer division started losing market share to other brands, it repositioned its products as high-end business machines and focused on the enterprise market

Promotion-related extension strategies

These extension strategies involve changing the promotional aspects to extend a product's life cycle and could include one or more of the following changes:

Changes to advertising

Price promotions e.g. Cyber Monday occur on the first Monday after Thanksgiving in the USA or discount prices

Sales promotions e.g. many coffee shops offer a loyalty program where customers can have a free drink for every six drinks consumed

SWOT analysis

strengths, weaknesses, opportunities, threats a framework used to evaluate a company's competitive position and to develop strategic planning.

STEEPLE analysis

An analytical framework used to examine the opportunities and threats of the external environment

(social, technological, economic, environmental, political, legal, and ethical environments) on business activity.

GANTT Chart

A time and activity bar chart that is used for planning, managing, and controlling major programs that have a distinct beginning and end.

The Boston Matrix

The Boston Matrix describes the impact of market share and market growth on businesses by using four categories: dogs, cash cows, question marks (or problem children) and stars.

ANSOFF Matrix

An analytical tool to devise various product and market growth strategies, depending on whether businesses want to market new or existing products in either new or existing markets.