Business - theme 1 - marketing

Mass market

Products aimed at the whole market and are produced in large quantities and widely available.

Niche market

Products aimed at a small part of the market and is produced in smaller quantities and targeted at specific groups of people

Market size

The total sales in a market in a year

Market share

The percentage of total sales that a business has

Brands

Name, term, design or symbol that distinguishes one sellers good or service from others

Dynamic market

rapidly changing business environment.

Innovation

Bringing a new idea to life, such as launching a new product or serve onto the market.

Competition

rivalry between businesses in a market

Direct competition

rival firms are selling the same type of product e.g. coca cola vs pepsi

Indirect competition

firms with different products but are satisfying the same needs

Risk

Any uncertainty that could potentially negatively impact a company’s financial performance, operations or reputation.

Uncertainty

Any situation where a business face risks that can’t be foreseen or measured.

product orientated

Focuses on the product itself and the production process.

Market orientated

The starting point is the needs of the consumer in the market

Market research

involves gathering, presenting and analysing information about the marketing and consumption of goods and services.

Primary research

The gathering of new information which does not already exist

secondary research

collection of data that is already in existence

quantitative research

process of collecting and analysing numerical data

qualitative research

a type of research that explores and provides deeper insights

market segmentation

dividing a market up into types of customers with similar lifestyles and buying habits

market mapping

process of using a graph to plot competitors and their products to understand competitor behaviour and spot a gap in the market

Competitive advantage

allows a firm to generate more sales than its rivals

product differentiation

the characteristics that make your product or service stand out to your target audience

added value

difference between the cost of production and the selling price to the customer

Demand

amount of a product that consumers are willing and are able to purchase at any given price

shifts in demand

if it shifts right then demand is increasing - if it shifts to the left than demand is decreasing.

supply

The total quantity of a product that producers are willing and able to sell at various price levels.

shift in supply (hint its the same as demand)

supply increase = shifts to the right - supply decrease = shift to the left

market equilibrium

The point where supply meets demand is the equilibrium

excess demand

when demand is greater than supply (shortage)

excess supply

when supply is greater than demand (surplus)

price elasticity of demand (PED)

measures the responsiveness of demand to a change in a products own price (how price sensitive customers are)

price inelastic <1

if price changes demand will NOT be affected significantly

Price elastic >1

If price changes demand WILL be affected significantly

Income elasticity of demand (YED)

A measure of how demand responds to a change in average UK income

Income inelastic (<1)

If income increases demand will not increase significantly

Income Elastic (>1)

If income increases demand will increase significantly

Function

what the product does, how it works and its reliability

Aesthetics

How the product looks and its appealing design

Cost

How much does the product cost to make, it it viable or profitable

promotion

the methods used to advertise and sell a product, including advertising, sales promotions, and public relations.

Informative advertising

These adverts are designed to increase customer awareness of products

Persuasive advertising

designed to put pressure on consumers to buy a product

reassuring advertising

aimed at existing customers and is designed to be comforting and suggest to consumers they were right to buy a particular product

Below - the - line promotion

refers to any form of promotion that the business controls itself

sales promotion

free gifts, coupons, loyalty cards, money off deals

public relations

press releases, press conference, sponsorship and donations

Merchandising and packaging

product layout, where stock is located in store, display materials in shops

Direct mailing

email or text messages

direct selling

Sales reps calling houses and call centres

Exhibitions and trade fairs

include popular exhibitions such as the boat show in Southampton

pricing strategies

plans to meet marketing objectives

cost plus pricing

Adding a percentage to the costs of producing a product to get the price.

price skimming

set a high price for a limited period of time (iphone)

penetration pricing

setting a low price when launching a new product in order to get established in the market

predatory pricing

setting a low price forcing rivals out of business

competitive pricing

pricing based on the prices charged by rivals

psychological pricing

set price below a round number e.g. £4.99

distribution

distribution channel is the route the product takes from producer to consumers

Retailers

A business that buys goods from manufacturers and wholesalers and sells them in small quantities to consumers

Wholesalers

A business that buys goods from manufacturers and sells them in smaller quantities to retailers

Agent brokers (clue think of estate agents)

An intermediary that brings together buyers and sellers - in the middle between whole salers and retailers

product life cycle

level of sales over a time period

Product development (stage 1)

designing and testing a new product

Introduction (stage 2)

Launch product with expensive promotion campaign

Growth (stage 3)

Sales growth rapidly

Maturity (stage 4)

stable market share, sales start to flattern out and competition have similar products

decline (stage 5)

Sales fall, the tastes or technology changes

Extension strategies

Methods used to lengthen the life cycle of a product by preventing or delaying it from reaching the decline stage of product life cycle

product - related extension strategies

Involves changing or modifying the product to make it more appealing to customers and extend its life cycle and can be achieved via product improvement, line extensions and repositioning

Promotion - related extension strategies

Involves changing the marketing and promotion of the product to extend its life cycle and involves changes to advertising, price promotions and sales promotions

the boston matrix

This allows a firm to analyse its products in terms of market share and market growth

Star

A product that has high market share in a fast-growing industry and typically generates significant revenue, often requiring substantial investment to maintain its position.

Cash cow

low growth but high market share product that generates steady revenue with minimal investment.

Question marks

Low share and operate in high growth market - may need lots of investment to grow market share

Dog

A product with low market share in a low growth market, typically generating little revenue and often considered a candidate for discontinuation.

Marketing strategy

set of plans that aim to achieve a marketing objective which include gaining market share, increase sales revenue and improve brand recognition