3.14 What is Marketing? Flashcards Preview

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Flashcards in 3.14 What is Marketing? Deck (41)

Define Marketing

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


Consumer markets

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


Industrial markets

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


Marketing objectives

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


Marketing strategy

Long-term plan established for achieving marketing objectives


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


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


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



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



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


Equilibrium price

The market price that equates supply and demand for a product


Market size

The total level of sales of all producers within a market


Market growth

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


Market share

% of sales in the total market sold by one business


Product differentiation

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


USP (Unique selling point)

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


Niche marketing

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


Mass marketing

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


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


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


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)


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


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.


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.


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
-values and attitudes


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


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


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.


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


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


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


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


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


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 ...


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


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


Measure market size

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


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


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


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