business - unit 3

Unit 3 : Marketing

Role of marketing:

• Identifying and satisfying customer needs

• Identifying what products design should be like

• Identifying how much something should be priced at

• where/how do customers want to buy their product (distribution)

• Promoting products - ads. + other promotional techniques

What is a market?:

Market:

1. The total number of customers and potential customers for any particular good/service (e.g HK has a potential car market of 2.5 million people)

2. Total sales per day/per year (e.g $10,000 per day)

Market share:

• Market share: the amount of sales each particular business account for in a market - as a percentage of total sales 

• Calculated by finding a business % of total market sales

Understanding why & how markets change over time:

• Changes in consumer taste (trends)

• Changes in technology

• Changes in consumer incomes (as you get richer your tastes change)

• Ageing population (people are averagely older) - people are living longer (old people buy different things to younger people)

Why have some markets become more competitive?

• Competitive = amount of competing businesses

• Globalisation = lots of international firms competing for customers all over the world (breaking down international barriers) - more choice, no need to go abroad to buy goods

• Transportation improvements = cheap and easy to ship goods

• Growth of internet/e-commerce = easy to access many more businesses online

How should businesses react to these changes in the marketplace (i.e become more competitive)?

• Improve product offering

• discounts/reduce price

• Introduce loyalty schemes

• Better customer service

• Improve quality 

• Advertising

• Bigger portions/add value

• Delivery options

Mass and Niche markets: - always on test!

• Mass markets: very large and cater for lots of customers and products have a broad appeal (targets lots of people)

• Niche markets: target much smaller groups of people and creates products with a more specific set of needs/interests

Market segmentation:

• Market segmentation: breaking down a market into customers with similar characteristics ie: what does our average customer look like? - stereotyping

Why segment a business?

• Helps target promotion (e.g if you target young people you would use social media, not newspaper)

• Design better product to suit their interests

• Where to sell (e.g young consumers ship in cwb, older people shop in different ways/places)

• What price to charge

Ways to segment a market:

• Gender

• Income levels

• Region of world

• Age

• industry/business customers

• lifestyle/beliefs/interests

Market research:

• Market research: research into a market to discover information on wants and needs of target market, size of market, competitors, how much target market would pay, features they wants, where they live

Market VS product orientated businesses:

Market focused:

• Design goods/services around the needs and wants of the market

• High marketing budget as they spend lots on branding, sponsorship, advertising

Product focused:

• Focus on producing the best product they can, then find a market 

• Often high tech product - e.g iphone, supercomputers, AI

• Research development budgets are very high

• Primary sector business are also product focused (e.g farms)

• They don't conduct significant market research and marketing

Market research methods:

• Primary market research: data is collected from a new source, ie - freshly created info

• Secondary market research: data that has already been collected by someone else 

The need for sampling:

• Sample: is a small group of people who represent a large group 

• As a business cannot research the entire target market they must choose a small group to conduct MR on

Why do businesses sample when conducting MR?

• Markets are too large to gather all opinions

• Speeds up MR

• Makes size more manageable

• Reduces cost of MR

• Makes sure MR is focused on target market

Accuracy of Market Research:

What can reduce the reliability of market research?

• Bias being shown in research

• Wait till it is out of date to use

• Quality of questions

• Sample size is too small

• Sampling error

• Sources of secondary MR