IB Business Management Unit 4

The benefits of being th emarket leader with highest market share include:

1. Sales are higher than those of any competing business

2. Retailers will be keen to stock and promote the bestselling brands

3. Can be used in advertising and other promotional material

4. consumers are often keen to buy the most popular brands

Characteristics of markets:

1. Market size

2. Customer base

3. Barriers to entry

4. Competition

5. Market growth rate

6. Demographics

Consumer Markets

Markets for goods and services bought by the final user of them

Examples of marketing objectives:

1. Increasing market share - perhaps to gain market leadership

2. Increasing brand awareness

3. Increasing total sales levels - either in terms of volume or sales value

4. Development of new makrets for existing products to spread risks

Industrial Markets

Markets for goods and services bought by the final user of them

Market

A market is a place or a process where suppliers and customers can buy and sell goods and services

Market Growth

The percentage change in the total size of a market (volume or value) over a period of time

Marketing

The management task that links the business to the customer by identifying and meeting the needs of customers profitably. It does this by getting the right PRODUCT at the right PRICE at the right PLACE with the right PROMOTION

Marketing

The management task that links the business to the customer by identifying and meeting the needs of customer profitably - it does this by promoting the right product at the right price at the right place to the right customers

Marketing Audit

A review of the firm's current marketing mix, in terms of its strenghts, weaknesses, opportunities and threats

Marketing Mix

the main elements of a firm's marketing strategy: PRODUCT, PRICE, PROMOTION, & PLACE

Marketing mix

Product: making sure that the right products are supplied to meet the needs and wants of consumers

Price: Establishing the correct price to balance the needs and wants of consumers with the objectives of the firm (e.g., profit maximization, maximizing market share.)

Place: Finding the right distribution channls to get products into the hands of customers

Promotion: Informing customers and potential customers about the product and persuading them to take action (i.e. buy the product)

Marketing objectives

The goals set for the marketing department to help the business achieve its overall objectives

Marketing objectives of non-profits:

1. building membership support and connections with new donor clients

2. Raising th eprofil of the cause being championed

3. Brand awareness and positive information about activities being engagd in

Marketing Plan

The document outlining a firm's marketing objectives and strategies for a specified time period

Marketing Strategy

Any medium-to long-term plan for achieving the marketing objectives of a business

Marketnig strategy

Long-term plan established for achieving marketing objectives

Market Leaders

Are firms that dominate the market share in a particular market. The business that has the largest market share in an industry, as measured by value or volume of sales, is called the market leader

Market Orientation

Is an approach adopted by businesses that are OUTWARD looking. they focus on making products that they can sell, rather than selling products they can make

Market Share

Measures the value of a firm's sales revenue as a percentage of the industry's total; e.g. a business with 35% market share means that for every $100 sold in the industry, the firm earns $35 of the sales revenue

Market Size

The total level of sales of all producers within a market

Product Orientation

A marketing approach adopted by businesses that are INWARD looking. They can focus on selling products they can make, rather than making products they can sell

Social Marketing

Any activity that seeks to influence social behavior to benefit the target audience and society as a whole.

It DOES NOT mean SOCIAL MEDIA (e.g. Facebook)

4 Ps of the marketing mix

1. Product

2. Price

3. Place

4. Promotion

7 Ps of the extended marketing mix

1. Product

2. Price

3. Place

4. Promotion

5. People

6. Processes

7. Physical evidence

Consumer profile

A quanitfied picture of consumers of a firm's products, showing proportions of age groups, income levels, location, gender, and social class

Coordinated marketing mix

Key market decisions compliment each other and work together to give customers a consistent message about the product

Corporate image

Consumer perception o fa company behind a brand

Customer Relations Management (CRM)

Refers to the use of people in the marketing mix. CRM focusses on what can be gained during the lifetime of a positive relationship with customers

Differentiation

Differentiation is the process of distinguishing a prodct or business from competitiors in the market or industry

Ethical marketing

The moral aspects of a firm's marketing strategies. It can be encouraged by the use of moral codes of practice

Marketing mix

the four main elements of marketing strategies: PRODUCT, PRICE, PROMOTION, and PLACE (4 Ps)

Marketing objectives

The goals set for the marketing department to help the business achieve its overall objectives

Marketing plan

A marketing plan is often a formal written document whichoutlines in detail how the business unit intends to achieve the marketing objectives derived from the corporate objectives

Marketing planning

The process of formulating appropriate strategies and preparing marketin gactivities to meet marketing activities to meet marketing objectives

Marketing strategy

A long term plan established for meeting marketing objectives

Market segment

A sub-group of a whole market in whic hconsumers have similar characteristics

Market segmentation

Identifying different segments within a market and targeting different products or services to them

Market segmentation by demographics (examples):

Age

Gender

Race

Location

Employment status

Market segmentation by psychographics (examples):

Personality

Values

Attitudes

Interests

Lifestyles

Mass marketing

Mass marketing is an attempt to appeal to an entire market with one basic marketing strategy using mass distribution and mass media

Niche marketing

Niche marketing targets specific and well-defined market segments (i.e. niche markets). Concentrating all marketing effort on a small but specific and well defined segment of the population

Packaging

The eighth 'P' in the marketing mix which focuses on the ways in which a product is presented to the customer

Physical evidence

The image portrayed by a business (or perceived by customers) regarding its observable and tangible features such as the cleanliness and physical size of a business or the presentation of its staff

Position map

A visual aid that shows customers' perception of a product or brand in relation to others in the market

Process

Part of the extended marketing mix which refers to the methods and procedures used to give clients the best possible customer experience

Product differentiation

Product differentiation is the marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior

Repositioning

A strategy that involves changing the market's perception of a product or brand relative to those offered by rival firms

Segmentation

The process of categorizing customers into distinct groups of people with similar characteristics (such as age or gender), and similar wants or needs for research and targeting purposes

Targeting

Each distinctive market segment will have its own marketing mix. Different markets can also be targeted, depending on whether they operate in nice, differentiated or was markets

Target market

The market segment that a particular product is aimed at

Test marketing

Marketing a new product in a geographical region before the full scale launch

Unique Selling Point (USP)

Any aspect of a product that makes it stand out form those offered by rival businesses

Advantages of Moving-Average Method of sales forecasting

1. Useful for identifying and applying the seasonal variation to prediction

2. Reasonably accurate for short-term forecasts in reasonably stable economic conditions

3. Planning for each quarter in future

Cyclical variations

Variations in sales occurring over periods of time of much more than year

Disadvantages of Moving-Average method of sales forecasting

1. Fairly complex calculation

2. Forecasts further into the future become less accurate as the projections made are entirely based on past data

3. Forecasting for the longer term may require the use of more qualitative methods that are less dependent on past results

Moving-Average Method

The simplest method of time-series forecasting; assumes that the time series has only a level component plus a random component

Random variations

May occur at any time and will cause unusual and unpredictable sales figures; eg. exceptionally poor weather, or negative public image following a high-profile product failure

Sales forecasting

A quantitive technique that attempts to estimate the level of sales a business expects to achieve, over a given time period

Seasonal variations

Regular and repeated variations that occur in sales data within a period of 12 months or less

Trend

Underlying movement of the data in a time series

4 Functions of packaging

1. Customer perceptions

2. Product differentiation

3. Protection

4. Information

Advantages of successful branding

1. Price advantages

2. Recognition and loyalty

3. Distribution advantages

Boston Matrix

Is a tool for analyzing the product portfolio of a business. It measures whether products have a high or low MARKET SHARE and operate in HIGH or LOW GROTH industries

Brand

An exclusive name, symbol or design used to identify a specific product or business

Brand awareness

Measures the extent to which a particular brand is recognized amongst potential customers or the general public. It is usually measured as a percentage; e.g., if 999 out of 1000 people surveyed recognize the brand Coke, then Coke's brand awareness is 99.9 per cent

Brand development

Is a long-term product strategy that involves strengthening the name and image of a brand in order to boost its sales

Brand development

Measures the infiltration of a product's sales, usually per thousand population. If 100 people in 1000 buy a product, it has a brand development of 10

Brand extension

Refers to the use of an existing brand name that is successful to launch a new or modified product

Brand extension - PLC extension strategy

Building on a brand's success to launch a new or existing version of a product

Branding

Refers to the use of an exclusive name, symbol or design to identify a specific product or business. It is used to differentiate itself from similar products used by rival firms

Brand loyalty

The faithfulness of consumers to a particular brand as shown by their repeat purchases irrespective of the marketing pressure from competing brands

Brand value

The premium that accrues to a brand from customers who are willing to pay extra for it

Cash cow

Is a term used by the BCG Matrix to refer to any product that generates significant sales revenue due to its large market share in a slowly expanding or mature market

Consumer goods

Ar items bought by the final user for their own personal consumption. Examples include CONSUMER DURABLES (such as furniture, computers, and cars) and PERISHABLES (such as flowers and food)

Differentiation

Refers to any strategy used to make a product appear to be dissimilar from other. Examples include quality, branding, and packaging

Distribution advantages

The best brands are ore likely to be stocked in retail outlets, given better store locations, and shelf positions. A good brand will enable the product to 'fly on the shelf'

Dogs in the BCG matrix

Products with low market share in a low grown market. Firms need to use a product extension strategy or dispose of these products altogether

Extension strategies and the product life cycle

- Price reduction

- Redesigning

- Repackaging

- New markets

- Brand extension

Extension strategy

Is an attempt by marketers to lengthen the product life cycle of a particular product. Such strategies are typically used during the maturity or early decline stages of a product's life cycle

Generic brands

Are trademarks that have become synonymous with the name of the product itself. Examples include Coke, Rollerblade, Tipp-Ex, and Frisbee

Marketing myopia

Refers to the short-sightedness and complacency of marketers in adapting to changes in the market place. This may be especially true of product orientated businesses

New Markets - PLC extension strategy

Entering a new market with an existing market can extend the life of a product. This could involve a new export market or even just having the product being stocked with a new retailer

Packaging

Packaging in marketing concerns itself with the presentation of a product to a consumer

Price advantages

Firms that's sell undifferentiated products that have a variety of substitutes tend to compete on price and find it difficult to charge higher prices than their rivals

Price reductions - PLC extension strategy

Lowering prices increase the demand for a product. Discounting can help a firm get rid of excess stocks of those products in danger of becoming obsolete

Product

A broad term that refers to any physical or non-physical item that is purchased by either commercial or private customers

Product differentiation

Refers to any strategy used to make a product appear to be dissimilar from others. Examples include quality, branding, and packaging

Product life cycle

Is the typical process that products go through from their initial design and launch to their decline and withdrawal from the market

Product line

Describes the varieties of a particular product that serves the same purpose in a particular market. For example there are many different varieties of the BMW Mini, ranging from the basic model to the top of the range Mini Cooper S

Product mix

Describes the varieties of different product lines that a business produces

Product portfolio

The range of products or strategic business units owned and developed by an organization

Product range

All product lines of a firm's product mix; i.e. all the products sold by the business

Question marks (problem children) in the BCG matrix

Products with low market share in a high growth market. Considerable investment in these products may be needed to capture more market share from competitors and turn them into 'stars'

Recognition and loyalty

Having a recognizable brand increases a firm's competitive advantage as there is a greater chance of the product being sold - brand loyalty or perceived trustworthiness

Redesigning - PLC extension strategy

This may involve the introduction of a special features, or releasing limited editions of a product. All of which may add value in a customer's perception of a product

Repackaging - PLC extension strategy

The appearance of a product can significantly affect demand. Changing the appearance of the product's packaging - more attractive materials and colors - can increase demand

Six stages of the product life cycle

Research. Launch. Growth. Maturity. Saturation. Decline

Stars

Are products in the BCG Matrix that have high or rising market share in a high growth market

Stars in the BCG matrix

Products with high market share in a high growth market. As the market grows, develops and matures, a 'star' product could become the next 'cash cow' for a business