3.14 What is Marketing? Flashcards Preview

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Flashcards in 3.14 What is Marketing? Deck (41)
1

Define Marketing

The management task that links the business to the customer by identifying and meeting the needs of customers profitably

2

Consumer markets

Markets for goods and services bought by the final user of them

3

Industrial markets

Markets for goods and services bought by businesses to be used in the production process of other products

4

Marketing objectives

The goals set for the marketing department to help the business achieve its overall objectives

5

Marketing strategy

Long-term plan established for achieving marketing objectives

6

Market orientation

An outward-looking approach basing product decisions on consumer demand, as established by market research

7

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

8

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

9

Societal marketing

An approach that considers both the demands of consumers and the effects on all members of the public involved in some way when firms meet these demands

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Demand

The quantity of a product that consumers are willing and able to buy at a given price in a time period

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Supply

The quantity of a product that firms are prepared to supply at a given price in a time period

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Equilibrium price

The market price that equates supply and demand for a product

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Market size

The total level of sales of all producers within a market

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Market growth

The percentage change in the total size of a market ( volume or value) over a period of time

15

Market share

% of sales in the total market sold by one business

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Product differentiation

Making a product distinctive so that it stands out from competitors' products in consumers perception

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USP (Unique selling point)

The special feature of a product that differentiates it from competitors products

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Niche marketing

Identifying and exploiting a small segment of a larger market by dev. products to suit it

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Mass marketing

Selling the same products to the whole market with no attempt to target groups within it

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Demand features

1. Varies with price
2. - Changes in consumers' income
- Changes in the prices of substitute goods and complementary goods
- Changes in population size and structure
- Fashion and taste changes
- Advertising and promotion spending

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Supply features

1. Varies with price - will be more willing to supply a product if the price rises and will supple less as the price falls
2. Change in an of these determinants:
- Cost of production
- Tax by government
- Subsidies to suppliers -> reduce cost
- Weather conditions
- Advance in technology

22

Ads of niche marketing

+ Small firms may be able to survive and thrive in markets that are dominated by larger firms
+ Market is currently unexploited by competitors --> filing a niche can offer the chance to selll at high prices and high profit margins
+ Customers pay more for exclusive products
+ Niche market products can be also be used by large firm to create status and image (their mass-market products may lack these qualities)

23

Features of mass marketing

selling into the largest part of a market where there are many similar products and
services and where the majority of customer needs are similar and general
– associated with higher production and capacity levels
– economies of scale are achievable
– focus on low costs of production to achieve success/competitiveness
– likely heavy brand promotion/high volume sales/low profit margins/lots of
competition/little differentiation between products/services

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Features of niche marketing

the targeting of a small segment of a large market where customers are seen to have
special needs and wants.
– attractive to small businesses where there may be less competition and allows a clear
focus on specific customers.
– specialist skills/knowledge/market expertise is developed
– may be able to charge a premium price and earn higher profit margins
– develop loyal customers
– economies of scale not achieved and risk of overdependence on limited product
portfolio-vulnerable to market changes and increased competition.

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Ads of mass marketing

- Achieve economies of scale -> enjoy substantially lower average costs of production
- Mass-market strategies run fewer risks than niche's. For e.g: Niche contain relatively small no. of costumers --> change in consumer buying habits -> rapid decline in sales.

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Market segment - consumer groups

1. Geographic differences: - Cultural
- Climate, weather
2. Demographic: Study of population data and trends, age, sex, family size and ethnic background
- Income and social class
A - upper middle class (higher managerial, administrative and professional) - directors or lawyers
B - middle class - managerial staff - teachers
C1 - lower middle class - supervisory - clerical or junior managerial
C2- Skilled manual workers
D- working class - semi and unskilled manual workers
E - casual, part-time workers and unemployed
3. Psychological factors: - lifestyles
-personalities
-values and attitudes

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Ads market segmentation

+ Can define their target market precisely therefore can design and produce goods that are specifically aimed at target groups -> increase sales
+ Enables identification of gaps in the market to further exploited groups that previously have not been targeted
+ Differentiated marketing strategies can be focused on target market groups -> avoid wasting money trying to sell product to the whole market
+ Small firms can specialise in one or two market segments -> more chance to compete
+ Price discrimination can be used to increase revenue and profits

28

Disads of market segmentation

- R&;D and production costs might be high bc of having to market several different product variations
- Promotional costs might be high as different advertisements and promotions might be needed for different segments -> marketing economies of scale not fully exploited
- Production and stock-holding costs might be higher than for the option of just producing and stocking one undifferentiated product
- Extensive market research needed
- Excessive specialisation -> problematic if consumers in the segments change their purchasing habits significantly

29

Market segmentation

Identifying different segments within a market and targeting different products or services at them – a customer-focused strategy – identifying sub-groups in a market in which consumers have similar characteristics.

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Disads of niche market

- no economies of scale
- more risk bc fewer customer
- fewer customers -> limit total profit
- niche becomes more attractive -> affect original entrants

31

To be effective, marketing objectives should

- Fit in with the overall aims and mission of the business
- Be determined by senior management
- Realistic, motivating, achievable, measurable and clearly communicated in all departments

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Marketing objective is important because

- Sense of direction for marketing department
- Progress can be monitored
- Can be broken down into regional and product sales targets to allow management by objectives
- Form the basis of marketing strategy

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How marketing department coordinates with finance

- Finance use sales forecasts to help construct cashflow forecasts and operational budget
- Ensure necessary capital is available to pay for market budget

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How marketing coordinates with human resources

- Sales forecasts help devise a workforce plan for all departments e.g New staffs needed in sales and production
- Ensure recruitment is qualified to increase in sales planned by marketing dpt

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How marketing coordinates with operations

- Market research play a huge role in product developement
- Sales forecasts will be used to plan for the capacity needed e.g: Number of machines, inputs ...

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Benefits of market orientation

- Chances of new products failing are reduced (if market research is good)
- Consumer needs met -> survive longer and make higher profit
- Constant feedback from consumers - adaptation of product

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Benefits of product orientation

- Invent and develop products in the belief that they will find consumers to purchase
- Concentrate their efforts on producing high-quality goods. Quality > market fashion

38

Measure market size

- Volume of sales (units sold)
- Value of goods sold (revenue)

39

Benefits of high market share

- Sales are higher than any competing business -> could have higher profit
- Retailers are keen to promote best-selling brands
- As shops are interested in the brand -> able sell products to them at lower discount rate - 10% instead of 15%
- The image of "market leader" can be used in advertising bc consumers love popular brands

40

Problems with measuring market share and growth

A firm might sell less products but at a higher price --> by value increases but by volume decreases or stay the same. -> ambiguous
e,g: Cosmetic company specialises in low volumes of expensive products -> higher market share in terms of value then in volume

41

Portfolio analysis

- Considers the range of products a business produces in the light of the markets it operates in
- Considers market growth, market share and segmentation.
- Ensures:
+ always another product to replace one that is losing sales or market share
+ flexibility in a changing market situation
+ revenue to cover loss from a failing product