4.1 The role of marketing

Question 1

Marketing

Answer 1

Management task that links the business to the costumer by identifying and meeting the needs of costumers profitably
- getting the right product at the right price at the right place
- identifying wants and needs of target-market costumers
- satisfying these needs better than competitors

Question 2

Functions of marketing

Answer 2

• market research
• product design
• pricing
• advertising
• distribution
• costumer service
• packaging

Question 3

Coordinating marketing with other business functions

Answer 3

• Finance - funding the increased promotion budget
• HR - hiring additional employees
• Operations - using market research to determine preferences of costumers

Question 4

Market characteristics

Answer 4

• market size
• market growth
• competitors and ease of entry
• differentiated or homogenous (physically identical products) products
• segmentation

Question 5

Market size (market characteristic)

Answer 5

Total level of sales of all products within a market.
-can be measured in two ways - volume and sales of goods sold
Size of market is important for:
- assessing whether a market is worth entering
- calculating a business market share
- identifying growth or decline

Question 6

Market growth (market characteristic)

Answer 6

Percentage change in the total size of a market (volume or value) over a period of time.
The pace of growth depends on:
- economic growth
- changes in costumer tastes
- changes of costumers income
- development of new markets
- new innovative products
- whether market is saturated or not

Question 7

Competitors and ease of entry (market characteristic)

Answer 7

Lack of barriers for the establishment of new competitors in a market.
-business need to be aware of the number and size of their direct and potential competitors
-the greater the number of competitors the easier to enter new market

Question 8

Differentiated or homogenous products (market characteristic)

Answer 8

If businesses can differentiate from their competitors by making their product unique, they can charge relatively high prices.

Question 9

Segmentation

Answer 9

Dividing a market into distinct groups of consumers who share common tastes and requirements.
-separating costumers into groups that have common needs and will respond similarly to marketing activities
-it enables companies to target different groups of costumers

Question 10

Target marketing

Answer 10

Focusing marketing activities on particular segments of the market, it recognises the diversity of costumers.

Question 11

Mass marketing

Answer 11

Using standardised product and the same marketing activities to the whole market.

Question 12

Characteristics of marketing goods

Answer 12

• can be stored and used at a later date
• usually can be taken back
• easily comparable
• newly formed businesses have product to sell

Question 13

Characteristics of marketing services

Answer 13

• consumed immediately
• can’t be taken back
• harder to compare quality for customers
• requires skilled labour
• a newly formed company has to establish trust and sell confidence in itself before the service
• long-term relationship building
• time-intensive

Question 14

Marketing approaches

Answer 14

• market orientation
• product orientation

Question 15

Market orientation

Answer 15

Outward-looking approach, based on making product decisions, on costumer demands
-requires research and market analysis to predict future demands.
- costumer is the priority – attempting to sell the product that a costumer wants rather than sell what they don’t really want
- can lead to significant fluctuations in popularity of a brand

Question 16

Product orientation

Answer 16

Inward-looking approach, focusing on making products that can be made or have been made for a long time and later trying to sell them.
-Businesses develop products in a belief that they will find costumers to buy them
-Concentrating on efficiently developing high-quality goods

Question 17

Social marketing

Answer 17

This approach considers not only the demands of consumers but also the effect on all members of society involved when firms meet these demands.

Question 18

Characteristics of social marketing

Answer 18

• Products that meet societies long-term interests, i.e. not testing on animals
• Balance between company’s profits, consumer wants and societies interests
• Social marketing considers long-term welfare i.e. protecting the environment, paying workers liveable wages, etc.
• These businesses still aim to satisfy consumer needs and wants in a way that enhances society’s welfare
• Could give a business a significant competitive advantage
• If successful firms can charge higher prices for its products as its sale benefits society

Question 19

Market share

Answer 19

Percentage of sales in the total market sold by one business.

Question 20

Market share formula

Answer 20

(firms sales in a time period : total market sales in time period) x 100%

Question 21

Market leadership

Answer 21

When a business has the highest market share of all firms that operate in this market.

Question 22

Benefits of being a market leader

Answer 22

• Higher sales
• Retailers want to stock and promote best-selling products
• Strong bargaining position with suppliers and retailers
• Recruitment of high-class employees
• Easier to get investors

Question 23

Marketing objectives

Answer 23

Goals set for the marketing department to help the business achieve its overall objectives.

Question 24

Why are marketing objectives important?

Answer 24

• Provide a sense of direction to the marketing department
• Monitoring progress
• Can be broken down to regional and product sales
• They form basis of marketing strategies

Question 25

Marketing objectives for for-profit organizations

Answer 25

• Market share
• Total sales
• Average number of items purchased per costumer visit
• Frequency that a loyal costumer shops
• Percentage of returning costumers
• Number of new costumers
• Costumer satisfaction
• Brand identity

Question 26

Marketing objectives for non-profit organizations

Answer 26

• Maximising revenue from trading activities
• Increasing recognition of the organisation by society
• Promoting the work of an organisation to a wider audience

Question 27

Main marketing activities

Answer 27

• Market research
• Identifying the best way to communicate with the donors
• Assessing the effectiveness of different promotions and campaigns