4.1 The role of marketing Flashcards
What are “FMCGs”?
Fast moving consumer goods
What is market share?
The percentage of total market sales held by a business.
What are the two ways market share can be calculated?
Market share by VOLUME:
–> (Nr of products sold by company/ nr of products sold in the market) x 100
Market share by VALUE:
–> (Sales of products/ market sales) x 100
What is market leadership?
When a business has the highest market share of all firms that operate in that market.
How can a business gain a higher market share?
- Promotions/ advertising (more consumers are aware of your brand)
- Improvement of product quality
- Changes in price (higher price = higher revenue market share)
- Keep customer loyalty
- Negotiate better terms with suppliers
Why is calculating market share a good way of measuring a success?
- It shows how dominant you are in relation to competitors
- Can be a ‘benchmark’, so a target
- Apply to different markets
- Growth
- Could be used in several different markets
What INTERNAL factors affect (increase) demand?
- Decrease the price
- Advertising
- New/ improved products
- Sold in more places
What EXTERNAL factors affect (increase) demand?
- Preferences and tastes
- Income increases
- Government incentives to lower the price
- Population
- Price of complementary goods
- Substitutes
- Seasonality
Why do business need to know if the market is shrinking or growing
- Leave the market
- Produce less
- Pricing decisions
- Advertising
Why is market leadership useful?
- Brand recognition
- Economies of scale
- Price leadership
What is a market/ customer oriented approach?
A business reacts to what customers want. The decisions taken are based on information of customers needs and wants, rather than what the business thinks its right for the customer.
What is a product oriented approach?
A product orientated approach means the business develops products based on what it is good at making or doing, rather than what a customer wants. This approach can be criticised because it often leads to unsuccessful products - particularly in well-established markets.
What kind of approach does Tesla take?
Product orientated,
focus lies on improving product, improvements in technology
What kind of approach does Nike take?
Market/ customer orientated,
focus lies on giving out as many possible options to appeal to the customer!
What is social marketing?
This involves the use of commercial marketing techniques to achieve SOCIAL goals. The primary aim of social marketing is ‘social good’.
