Marketing Concepts

Needs and Wants

  • Needs: Essentials for human survival (e.g., food, shelter, water).
  • Wants: Human desires.
  • Marketing aims to address needs and wants, making customers want to buy products.

What is Marketing?

  • Identifying customer needs and wants.
  • Anticipating future customer desires.
  • Considering product, price, place, and promotion.
  • Earning a profit by satisfying consumer requirements.

Market Orientation vs. Product Orientation

  • Market Orientation: Outward-looking, focuses on fulfilling consumer needs and wants.
  • Product Orientation: Inward-looking, focuses on making products the firm can produce, hoping for demand.

Advantages and Disadvantages of Market-Oriented Firms

  • Advantages: Greater flexibility, quick response to market changes, lower risk.
  • Disadvantages: Requires market research (expensive), no guarantee of success due to the dynamic environment.

Advantages and Disadvantages of Product-Oriented Firms

  • Advantages: Quality control, more control over operations.
  • Disadvantages: Ignores market needs, high risk, high failure rate, high R&D costs.

When to Use Product and Market Orientation

  • Market orientation suits mass-produced products.
  • Product orientation suits innovative & high-end products.
  • Innovative companies are more product oriented.
  • Large retailers are more market oriented.
  • Fewer competitors mean a product-oriented approach is more appropriate.

Market Share

  • Definition: An organization's share of total sales value within a specific industry.
  • Calculation: Market Share=(Firm’s Sales/Total Sales in the Market)×100\text{Market Share} = (\text{Firm's Sales} / \text{Total Sales in the Market}) \times 100

Ways to Increase Market Share

  • Brand promotion
  • Product development
  • Motivating and training the workforce
  • Establishing intellectual property rights
  • Using more efficient channels of distribution

Market Growth

  • Definition: The rate at which the size of a market is increasing.
  • Calculation: Market Growth Rate=((Market Size in Current Year−Market Size in Previous Year)/Market Size in Previous Year)×100\text{Market Growth Rate} = ((\text{Market Size in Current Year} - \text{Market Size in Previous Year}) / \text{Market Size in Previous Year}) \times 100

Market Leadership (HL Only)

  • Definition: The business with the largest market share in a given market.

Benefits of Market Leadership (HL Only)

  • 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

Porter’s Generic Strategies and Market Leadership

  • Identify market leaders for each of Porter’s generic strategies.
  • Explain how the choice of strategy enabled market leadership.

Relationship Between Marketing and Other Business Functions

  • Operations management: Research, develop and launch products.
  • Finance: Set appropriate budgets.
  • Human resource management: Ensure the firm has the right quantity and quality of workers.