what is marketing Flashcards
Marketing
it is a management task that connects the business to customers by learning and identifying what customers want and need so that customers are satisfied and continue to purchase products and services even more
what is a management task
it is bout communicating with customers to find out what they want and then producing it to meet their needs profitably.
market
refers to the group of consumers that is interested in a product and have the resources to purchase the product and is permitted by law to purchase it
marketing involves a number of related management functions.
These include
■ market research ■ product design ■ pricing ■ advertising ■ distribution ■ customer service ■ packaging.
what is a marketing objective
the goals set for the marketing department to help the business achieve its overall objectives.
Examples of marketing objectives
■ market share – perhaps to gain market leadership
■ number of new customers
■ customer satisfaction
■ brand identity.
effective, marketing objectives should
■ fit in with the overall aims and mission of the business ■ be determined by senior management
■ be realistic, motivating, achievable, measurable and clearly communicated to all departments in the organisation
Why are marketing objectives important?
■ They provide a sense of direction for the marketing department.
■ Progress can be monitored against these targets
Market orientation:
an outward-looking approach basing product decisions on consumer demand, as established by market research.
Product orientation
an inward-looking approach that focuses on making products that can be made – or have been made for a long time – and then trying to sell them. ignoring customer needs
Asset-led marketing
an approach to marketing that bases strategy on the firm’s existing strengths and assets instead of purely on what the customer wants.
The benefits of market orientation are:
■ The chances of newly developed products failing in the market are much reduced.
■ If consumer needs are being met with appropriate products, then they are likely to survive longer and make higher profits than those that are being sold following a product-led approach.
■ Constant feedback from consumers
Societal marketing
this approach considers not only the demands of consumers but also the eff ects on all members of the public (society) involved in some way when firms meet these demands.
demand
the quantity of a product that consumers are willing and able to buy at a given price in a time period.
Supply:
the quantity of a product that firms are prepared to supply at a given price in a time period.
factors influencing demand for a product
price: for all normal goods the quantity bought rises with a price fall and the quantity bought falls with a price increase
■ changes in consumers’ incomes
■ changes in the prices of substitute goods and complementary goods
■ changes in population size and structure
factors influencing the level of supply of a product
price – firms will be more willing to supply a product if the price rises and will supply less as the price falls
■ costs of production
■ taxes imposed on the suppliers by government, which raise their costs
■ subsidies paid by government to suppliers, which reduce their costs
market location
local market
regional market
international market
electronic market
Market size:
the total level of sales of all producers within a market.
size of a market is important for three reasons
1 A marketing manager can assess whether a market is worth entering or not.
2 Firms can calculate their own market share.
3 Growth or decline of the market can be identified
how market size is measured
volume of sales
value of sales
Market share
the percentage of sales in the total market sold by one business. This is calculated by the following formula:
firm’s sales in time period divided by total market sales in time period × 100
benefits of a high market share
■ Sales are higher than those of any competing business in the same market and this could lead to higher profits too.
■ Retailers will be keen to stock and promote the best-selling brands. They may be given the most prominent position in shops.
Market growth
the percentage of change in the total sales of a market (volume or value) over a period of time.
how to calculate market growth
volume of sales from current year year minus volume of sales in previous year divided by volume of sales in previous year times 100
why is market growth important
to ensure the business is always profiting
market growth depends on
economic growth
changes in consumer incomes
changes in consumer tastes
technological changes
competitors
indirect competitor- businesses that provide an alternative product or service for customers to purchase
direct competitors- business that provide the same or very similar products and services in the same industry
examples of marketing strategies that are likely to add value:
■ Create an exclusive and luxurious retail environment
■ Use high-quality packaging to differentiate the product from other brands
■ Promote and brand the product so that it becomes a ‘must-have’ brand name
■ Create a ‘unique selling point’ (USP) that clearly differentiates a product from that of other manufacturers
Niche marketing:
identifying and exploiting a small segment of a larger market by developing products to suit it
Mass marketing:
selling the same products to the whole market with no attempt to target groups within it.
Advantages of niche marketing
■ Small firms may be able to survive and thrive in markets that are dominated by larger firms.
■ If the market is currently unexploited by competitors, then filling a niche can offer the chance to sell at high prices and high profit margins
■ Niche market products can also be used by large firms to create status and image
Advantages of mass marketing these qualities
■ Small market niches do not allow economies of scale to be achieved. Therefore, mass-market businesses are likely to enjoy substantially lower average costs of production.
■ Mass-market strategies run fewer risks than niche strategies. As niche markets contain relatively small numbers of consumers, any change in consumer buying habits could lead to a rapid decline in sales.
Market segmentation:
identifying different segments within a market and targeting different products or services to them.
Examples of market segmentation are:
■ Computer manufacturers, such as Hewlett-Packard, produce PCs for off ice and home use, including games, but also make laptop models for business people whotravel.
■ Coca-Cola not only makes the standard cola drink but also Diet Coke for weight-conscious consumers, and flavored drinks for consumers with particular tastes.
important marketing concepts
1.creating/adding value
2 Mass marketing and niche marketing
3 Market segmentation
three commonly used bases for segmentation are:
1 Geographic differences
2 Demographic differences
3 Psychographic factors
Advantages of market segmentation
■ Small firms unable to compete in the whole market are able to specialise in one or two market segments
■ Businesses can define their target market precisely and design and produce goods that are specifically aimed at these groups, leading to increased sales.
■ It enables identification of gaps in the market – groups of consumers that are not currently being targeted
disadvantages of market segmentation
■ Extensive market research is needed.
■ Production and stock-holding costs might be higher than for the option of just producing and stocking one undifferentiated product.
