4. Marketing + Strategy Flashcards
stategy 1
long term to achieve basic goals → create value
- choice of product (single/multi) → industry
- target groups / regions → market
- pricing, competition
- factor markets
strategy 2
addresses all means that help firms to
- attracts consumers
- capture/ create a market
- generate a strategic advantage
- become a better solution to a problem of your customers than any competitor
→ you have to create something new and useful for consumers (differentiation, niche), or use a new technology that lowers cost (cost leadership) that cannot simply be copied.
marketing
how to identify/ arouse/ satisfy customer needs so as to create value
goals of a business
- generate profit (sell at price greater than cost)
- create consumer benefit B that exceeds the opportunity cost of production C
→ value creation, avoidance of waste, and profit orientation go hand in hand
value creation
= perceived benefit of consumer (B) - average cost of production (C)
= B - C
= (B-P) + (P-C)
= consumer rent + producer rent
to create value
- reduction of production cost
• better technology
• cheaper factor supply
• learning curve - reduction of transaction cost
• identification, specification, enforcement - increase of consumer benefit
• better quality/ service
• additional functionary
• addressing additional needs
demand elasticity
- n = dQ/Q x P/dP = P/Q x dQ/dP
- n > 1: elastic demand
- n < 1: inelastic demand
monopoly price
- revenue maximization → maximum market potential
- profit = R(Q) - cQ - F is maximised if MR = MC
without product differentiation
firm would produce a good that is hardly distinguishable from what the competitors do
→ industry sells Qc at price PC
→ small competitive profit, but in larger market
with product differentiation / occupying a market
- demands shifts inwards (smaller number of consumer)
- better address consumer’s taste
→ each consumer might have higher willingness to pay
→ demand shifts outward - now firm obtains a monopoly position and sells Qm at pm
→ larger monopoly outfit, but in a smaller market
marketing mix: the 4P
- product
- price
- place
- promotion
product (4p)
anything that can be offered to a market for attention, use or consumption that might satisfy a need, including service
place (4p)
location of the business
→ distribution channel: a set of independent organisations that help to make a product available for use or consumption by the final users
promotion (4p)
the process of stimulating demand for a company’s product
→ advertising, sales promotion, personal selling, public relation
price (4p)
amount of money charged for a product
→ e.g. per unit price, entrance/ membership fee, complement and bundle, quantity discount
