4.1 Introduction to Marketing

Question 1

what is a market

Answer 1

• a place, physical or virtual, where buyers and sellers come to exchange goods

Question 2

business to consumer marketing

Answer 2

a business selling products to customers

Question 3

marketing mix

Answer 3

decisions of a business regarding its product, price, promotion, place, people, processes and physical evidence

Question 4

product

Answer 4

the good or service which satisfies a need or want in a market

element of marketing mix

Question 5

price

Answer 5

amount of money a business charges for a product or service

element of marketing mix

Question 6

promotion

Answer 6

advertising, sponsorships, sales promotion, or other tactics to inform and persuade customers to buy a product

element of marketing mix

Question 7

place

Answer 7

physical distribution of the product

element of marketing mix

Question 8

people

Answer 8

those involved in offering a service

element of marketing mix

Question 9

processes

Answer 9

acitivities needed in the interaction between the customer and the business

element of marketing mix

Question 10

physical evidence

Answer 10

sensory elements that the customer sees, smells, hears and touches when interacting with a business

element of marketing mix

Question 11

marketing

Answer 11

range of ideas in which a business can adapt strategy to meet the needs and expectations of consumers and sell their products

Question 12

product orientation

Answer 12

prioritising research and development of high quality, specialised products, rather than prioritising market research

Question 13

patent

Answer 13

licence/ grany that gives an inventor exclusive right to make, use or sell a product for a specific period of time

Question 14

market leader

Answer 14

product/ brand with highest market share

Question 15

disadvantages of market orientation

Answer 15

high risk

high costs

no guarantee that customers will want to buy the final product
ergo, money invested in the product is lost

Question 16

advantages to market orientation

Answer 16

USP and quality (distinguishes itself from competitors)

monopoly power (patents enable the business to be the sole producer for a period of time (ergo, large revenues and profits))

lack of competition (totally new products = little or no competition)

Question 17

market orientation

Answer 17

sole focus of the business is on the needs and wants of a market segment

Question 18

unique selling point (USP)

Answer 18

feature of a product that distinguishes it from its competitors

Question 19

what is a type of organisation more likely to be market oriented

Answer 19

social enterprise (as it meets human needs)

Question 20

advantages of market orientation

Answer 20

low risk

repeat customers

social enterprises (want to be market oriented to solve human problems and meet human needs)

Question 21

disadvantages of market orientation

Answer 21

no USP (not distinguished from competitors; greater competition)

market research must be right

agility (must be responsive to changing market conditions)

Question 22

market share

Answer 22

value os a single company’s sales or revenues compared with the sales of all businesses in a market

Question 23

market growth

Answer 23

increase in sales revenues or sales volume in an individual market over time

Question 24

formula for market share (sales)

Answer 24

(product sales/ total market sales) * 100

Question 25

formula for market share (units sold)

Answer 25

(units solf by business/ total units sold in market) * 100

Question 26

market growth formula

Answer 26

((total market shares T2 - total market shares T1) / total previous market sales T1) *100

Question 27

advantages of market leadership

Answer 27

• accessing distribution channels (ie retailers) (creates positive feedback loop = high market share leads to wide distribution and strong sales, do market share grows more)
• brand recognition (customers more likely to buy a brand they recognize)
• economies of scale (lower unit cost than competitors; buys in bulk, cheaper; equipment and advertising spread over a larger volume ou output; therefore, lower prices for customers or same prices and larger profits)
• price leadership (market leaders usually have a lot of control over the product price)

Question 28

distribution channel

Answer 28

network used to move a product from the manufacturer to the end users

Question 29

advantages of market leadership FOR CUSTOMERS

Answer 29

• networks: product becomes more valuable the more people use it
• price: economies of scale, so lower prices for customers
• innovation: high sales and profits, so investments in product research and development

Question 30

disadvantages of market leadership FOR CUSTOMERS

Answer 30

• networks: larger businesses may dominate and abuse power in networks)
• price: even if they get economies of scale, there is no guarantee they will lower prices. they may simply want higher profits. dominant company controls prices, so may raise prices for customers due to low competition.
• innovation: domination = low competition, so no incentive to dominate

Question 31

disadvantages of market leadership FOR THE BUSINESS

Answer 31

• dominant businesses may not want to innovate, and their high profits may attract competitors who can innovate quicker
• business may get too large and experience diseconomies of scale

Question 32

disadvantages of maket leadership FOR THE ECONOMY, SOCIETY AND THE ENVIRONMENT

Answer 32

• lobbying politicians for favourable legislation which weakens the environment
• lobbying politicians to lessen competition in the market (support for mergers and acquisitions)
• resisting trade unions and efforts of kess powerful individuals for fair pay
• tax loopholes to avoid paying tax (which is used for essential services and infrastructure)