4.1 - Introdution To Marketing Flashcards
What is the two definition of marketing
Ultimately, marketing is getting the right product to the right costumer at the right price at the right time. And of course, marketing decisions are closely related with the other business functions (Finance, HR and Operations)
What is the definition of market oriented approach
focusses on provide product based on costumers needs and wants. This normally comes after market research has been done. For example, improving existing products according to costumers’ requirements.
Some examples of companies that use this approach can be Google, or Uber. These organizations use promotional strategies to persuade the customers to buy their products.
Define product orientation
this approach focusses on making a product first and sell it to the customers without relying on what their needs and wants are.
This organizations focus mainly on R&D rather than market research to come up with an innovative new or existing product. For example, an electric car (Tesla) the Apple watch (Apple).
Summarise the product orientated approach
- inward looking - focused on making the product first then trying to sell it
- product led and assumes that supply creates its own demand. Here, businesses produce innovative products and tempt customers to buy them
Summarise the market orientated approach
- outward looking; focused on carrying out market research first and then making products that can sell
- market led and focused on establishing consumer demand in order to supply products that meet consumers needs and wants
What are 4 advantages of market oriented approach
- The risk of failure is less since firms bases their approach on market research and are confident that their products will sell.
- Market information gives the firms the advantage to respond quickly to changes in the market and also anticipate possible changes.
- Market research also gives the firm feedback (by consumers) on the competition.
- Firms are constantly exploring opportunities to improve their products and services to adapt to current and future needs of customers.
What are the 4 disadvantages of a market oriented approach
- Conducting market research can be costly and influence heavily in the firms’ budget.
- Risk of Underestimating the Market. When a company uses ineffective data in its approach to reach out to customers the results can be misleading (working with wrong data is often worse than working with no data at all)
- Changes in consumers tastes and preferences make it very difficult for a firm to meet every customers’ needs with their available resources.
- Uncertainty about the future due to external factors can also affect the marketing planning.
What are 5 advantages of a product oriented approach
- It allows the business to focus on product quality. Hence, it is associated with high -quality products (i.e. Luxury cars)
- It lets technology to be developed and used for a wider range of products. An example of a product-oriented business was Sony’s creation of the Walkman. This device was created as a product to be sold and not based on what customers wanted at that time. The product proved successful, and the technology was then used by Sony to create additional music listening devices
- In industries where the speed of change is low the firm that already built a reputation can succeed (i.e. Apple).
- Since the focus is specifically directed to a product, the company can produce this product efficiently and in mass quantities. More quantities can be made at a lower price, which will increase the number produced (known as Economies of Scale).
- A small business can focus solely on creating one product and making it the best product possible. Once the design is created, this design can be sent to another factory for production. This can also save on costs (known as Outsourcing).
What are the 5 disadvantages of a product oriented approach
- If a firm builds a superior product, customers should want it – but people don’t always want what’s best for them, and a solely product-oriented approach will cost the firm opportunities to exploit this.
- If the firm focusses on branding and selling only its own product’s construction, features, cost, quality or other hard facts, a new competitors’ change in technology or other market factor that devalues the firms’ current product’s selling point can put the firm out of business.
- The firm risks failure since it sis ignoring the need of the market.
- Spending money in R&D without considering consumers’ needs could be costly and not reach the results predicted.
- Narrow Branding happened when a firm focuses in only one product it is very difficult to introduce another (i.e.if a firm sells shoes using a product-oriented approach that focuses on the construction, value, price and style of the footwear, it might have a difficult time introducing a line of handbags if that product is more of an impulse buy or one driven by taste.
Define market share
Refers to the percentage of one business share of total sales in the market
How do you calculate market share
Market share % = firms sales/ total sales in the market X 100
What 2 ways can market share be measured
- by volume - measured in units, hence a quantitative measure. It measures number of goods bought by customer
- by value - measured in a monetary value, currency. It measures the amount spend by costumers on good sold by firm
Define market size
represents the total sales of a business in a given market. Same as market share, it can be measured by value (monetary value) or by volume (units). The calculation of the market size will help to identify (calculate) the market growth.
How can you calculate the market size
We can calculate the market size adding up the Revenues (generated by the sales) of all the companies in that market.
Define market growth
Refers to the increase in the size of the market per period of time. It can be measured by an increase in the value or volume of sales in the market. It is represented as a percentage change to indicate the extent of the market growth
