Chapter 17: The nature of marketing Flashcards
Marketing objectives
The goals set for the marketing department to help achieve corporate objectives
4 P’s and 4 C’s
Product - Customer solution
Price - Cost to customer
Place - convenience to the customer
Promotion - Communication with the customer
Marketing
Identifying and meeting customer needs and wants profitably by getting the product at the right price, right place at the right time
Corporate objectives
Well-defined and realistic goals that are set for the whole company. These produce the marketing objectives
Marketing involves
Market research
Product and package design
Pricing, advertising and distribution
Customer services
Marketing should result in
Increased market share
Increase in total sales
average goods sold per customer
Shopping frequency by loyal customers
Customer loyalty
number of new customers
customer satisfaction
brand identity
Marketing objectives should be
Linked to achieving corporate objectives
Determined by senior management
Realistic, motivating, achievable, measurable and communicated to all departments
Why are marketing objectives important?
Provide a sense of focused direction
Can help measure business success
They can be broken down into regional and product sales targets
They form the basis of marketing strategy
Marketing strategy
A plan of action detailing how a business intends to achieve its marketing objectives by creating a competitive advantage
Examples of marketing strategy
Penetrating existing markets
Entering new markets in other countries
Developing new, or updating products
Coordination of marketing with the finance department
The finance department will rely on marketing’s sales forecasts for cash flow and budget planning.
Finance must secure adequate capital to cover the approved marketing budget for promotional expenses.
Coordination of marketing with the HR department
HR will use sales forecasts to develop a workforce plan, which may include hiring more sales and production staff to boost sales.
HR must ensure the recruitment and selection of qualified and experienced workers
Coordination of marketing with the operations department
Market research data will play a key role in new product development
The operations department will use sales forecasts to plan the capacity needed.
Demand
The quantity of a product that consumers are willing and able to buy at a given price in a specific time period.
Supply
The quantity of a product that firms are prepared to supply at a given price in a specific time period
Equilibrium price
The price level at which demand is equal to supply
Demand curve
A downward slope that shows, for normal goods, the lower the price the more the demand. It has an inverse relation with price.
Supply curve
The higher the price the higher the quantity supplied. It has a positive relation with price.
Market segment
A subgroup of a market iwhere customers have similar characteristics
Industrial market
The selling of products from one business to another, aka B2B
Consumer market
Selling of products from businesses to consumers, aka B2C
Customer/market orientation
An outward-looking approach that bases product decisions on consumer demand as established by market researcher
Benefits of customer orientation
Low chances of newly developed products failing
More profitable products with longer lifespan because it is based on customer needs
Constant feedback means market research never ends
Product Orientation
An inward-looking approach on making products that can be made for a long time and then trying to sell them
Benefits of product orientation
Invents and develops products
High concentration on high-quality goods
Market size
Total value of sales of all producers in a time period
Importance of market size
Allows a marketing manager to see if its worth entering a market
Allows a business to calculate its own market share
Market growth/decline can be identified
Market growth
Percentage change in the total market (volume or value) size over a time period
The rate of market growth depends on
The country’s economic growth
Changes in consumer income/taste
Development of new markets
Technological changes boosting market sales
Whether the market is saturated
Brand leader
The brand with the highest share of the market
Implications of an increase in market share
Sales rise faster than competitors
Possibility of increasing the price/profit per unit
Less costs due to more sales
More competition from new businesses entering the market
Implications of a decrease in market share
Sales will increase slowly
Competitors may decrease prices to increase sales
Lower prices mean lower profit per unit
Consumer products
Goods/services sold to end users
Industrial products
Goods/services sold to businesses
the 3 consumer products
Convenience- purchased frequently (water)
Shopping: Not bought frequently, requires planning (microwave)
Specialty: Often expensive with strong brand loyalty (phones)
The 3 industrial products
Material and components: raw materials
Capital items: Equipment, machinery and vehicles
Services and supplies: Business services and utilities
Mass marketing
Selling standardised products in the same way to the whole market
Advantages of mass marketing
High sales can lead to lower average costs
Cost advantages can lead to lower prices for consumers
Can result in extensive publicity
disadvantages of mass marketing
Undifferentiated products can be unappeaing
Low prices do not create a premium brand image
Some changes could lead to a fall in demand
Niche marketing
Identifying/exploiting a small segment of a larger market by differentiating products to suit that segment
Advantages of niche marketing
Small businesses can survive in markets not dominated by big businesses
An unexploited niche has no competitors
Exclusive marketing/products create status/image
disadvantages of niche marketing
Do not allow economies of scale
Limited growth because of few customers
Businesses are vulnerable to market change
Profitable niche markets attract competitors
Market segmentation
Identifying customers with common needs in a market and marketing different products to those customers
E.g computer manufacturers make home and gaming computers but also laptops for people who travel
Consumer profile
A quantified picture of a business’s consumers, showing data about age, income, location, gender and social class
Methods of Market Segmentation
Geographic: Cultural, social and climatic differences
Demographic: age, gender, income, social class
Psychographic: lifestyles, personalities, values
Advantages of market segmentation
- Businesses can define their target market precisely
- Identifies market gaps
- Different marketing strategies for different consumers
- Small firms can specialise in one market segment
- Price discrimination can increase revenue and profits
Disadvantages of market segmentation
- Research/development costs can be high
- Promotional costs can be high
- Product/inventory costs can be high
- Excessive specialisation can backfire if consumers change their buying habits
- Extensive market research is needed to identify market segments
Customer relationship marketing (CRM)
Maintaining customer loyalty through personalised experiences that build good customer relationships
Methods of building long-term relationships with customers
Targeted marketing: Giving the customers what they want
Customer service and support
Regular communication with customers
Using social media
Benefits of CRM
Results in higher sales
It is a sustainable strategy for long-term
Cost-effective
Easier to maintain loyal customers than to get new ones
costs of CRM
IT systems and software are needed
Employees need to be trained to respond to customer feedback
External marketing consultancy can be costly
Requires customer base
