4.1 - introduction to Marketing Flashcards
Define the term ‘Marketing’
The art of determining the goods and services required to meet the needs and wants of customers in a sustainable way.
Most marketing activities are concerned with anticipating, identifying, and satisfying the needs and wants of the market, in a profitable manner.
What does an organization’s marketing function strive to provide the market with? (Hint - the 4Ps)
The marketing function of an organization strives to provide the market with the:
- right products that appeal to customers
- at the right prices in order to attract customers
- effective promotion to entice customers, and
- convenient and efficient distribution for ease of purchase.
Define the term:
1. Marketing Orientation
2. Product Orientation
Market Orientation is an approach to marketing that focuses on meeting the specific demands (desires and needs) of customers and potential customers.
Product Orientation is an approach to marketing that focuses on making products a business knows how to make well, rather than primarily concentrating on the needs and desires of potential customers.
State three ADVANTAGES and DISADVANTAGES of Market Orientation
ADVANTAGES:
1. New product launches are more likely to be successful as they are based on market research, so are more likely to be accepted by the target market.
2. Helps reduce the financial risks involved in product development by focusing on changing needs and wants.
3. Access to the latest market information gives firms the chance to respond quicker to changes in the market.
DISADVANTAGES:
1. Can be very expensive (negative impact on finances).
2. Potential for researcher bias, unrepresentative results from using an inappropriate sample size, and/or using outdated information.
3. Data is often easily accessible to rival firms, so any competitive advantage and attractive profit margin can quickly disappear.
State three ADVANTAGES and DISADVANTAGES of Product Orientation
ADVANTAGES:
1. By being innovative, can give firms a competitive advantage or a (USP).
2. Can help a business to gain a positive corporate image for being innovative, thereby helping to strengthen customer loyalty.
3. By focusing on R&D, it is harder for competitors to copy the products created by the firm.
DISADVANTAGES:
1. It requires highly skilled and costly staff (product designers) to come up with new and innovative ideas.
2. There is no guarantee that customers will like to want to buy the final product.
3. Risky to ignore the (changing) demands of the market, especially if competitors are market-orientated.
Define the term ‘Market share’
State the equation for Market Share
Market share is a measure of the size of a business in comparison to others in the same industry by calculating its proportion of the total value of sales revenue in the industry.
Market Share (%) = (firm’s sales/total sales in the market) x 100
Define the term ‘Market Size’
Knowledge of the market size is therefore necessary in order to calculate market share. Market size is the total number of individual customers or the total value of sales revenue in a certain market.
What are the 4 different most common methods of measuring the size of a market?
- The potential number of customers in a market for a particular good or service.
- Sales volume, i.e., the quantity of products sold to customers.
- Sales value (or sales revenue), i.e., the amount spent by customers on the product sold by firms in the market.
- The number of competitors (rivals) in the market. The greater the barriers to entry into the market, the fewer the number of rivals will exist in the market.
Define the term ‘Market Growth’
State the equation for Market Growth
Market growth refers to an increase in the size of a market, usually measured by the rise in total sales revenue of the market or industry. It is a common business objective.
Market Growth = (Market Size in Period 2 - Market Size in Period 1) /Market Size in Period 1
Positive = Market is Growing
Negative = Market has Shrunk
Define the term ‘Market Leader’
State three benefits being a market leader brings to a business.
A market leader refers to the business with the largest market share in a given industry.
- Suggests the market leader enjoys brand loyalty, so customers are prepared to pay higher prices.
- Can help the business to attract more investors, as well as higher quality employees.
- Beneficial to the firm’s future strategy as it is able to shape the industry whilst competitors merely follow the trends set.
