3.14 What is Marketing?

Question 1

Define Marketing

Answer 1

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

Question 2

Consumer markets

Answer 2

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

Question 3

Industrial markets

Answer 3

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

Question 4

Marketing objectives

Answer 4

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

Question 5

Marketing strategy

Answer 5

Long-term plan established for achieving marketing objectives

Question 6

Market orientation

Answer 6

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

Question 7

Product orientation

Answer 7

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

Question 8

Asset-led marketing

Answer 8

An approach to marketing that bases strategy on the firm’s existing strengths and assets instead of purely on what the customer wants

Question 9

Societal marketing

Answer 9

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

Question 10

Demand

Answer 10

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

Question 11

Supply

Answer 11

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

Question 12

Equilibrium price

Answer 12

The market price that equates supply and demand for a product

Question 13

Market size

Answer 13

The total level of sales of all producers within a market

Question 14

Market growth

Answer 14

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

Question 15

Market share

Answer 15

% of sales in the total market sold by one business

Question 16

Product differentiation

Answer 16

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

Question 17

USP (Unique selling point)

Answer 17

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

Question 18

Niche marketing

Answer 18

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

Question 19

Mass marketing

Answer 19

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

Question 20

Demand features

Answer 20

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

Question 21

Supply features

Answer 21

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

Question 22

Ads of niche marketing

Answer 22

+ 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)

Question 23

Features of mass marketing

Answer 23

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

Question 24

Features of niche marketing

Answer 24

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.

Question 25

Ads of mass marketing

Answer 25

- 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.

Question 26

Market segment - consumer groups

Answer 26

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

Question 27

Ads market segmentation

Answer 27

+ 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

Question 28

Disads of market segmentation

Answer 28

- 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

Question 29

Market segmentation

Answer 29

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.

Question 30

Disads of niche market

Answer 30

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

Question 31

To be effective, marketing objectives should

Answer 31

- 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

Question 32

Marketing objective is important because

Answer 32

- 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

Question 33

How marketing department coordinates with finance

Answer 33

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

Question 34

How marketing coordinates with human resources

Answer 34

- 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

Question 35

How marketing coordinates with operations

Answer 35

- 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 ...

Question 36

Benefits of market orientation

Answer 36

- 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

Question 37

Benefits of product orientation

Answer 37

- 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

Question 38

Measure market size

Answer 38

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

Question 39

Benefits of high market share

Answer 39

- 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

Question 40

Problems with measuring market share and growth

Answer 40

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

Question 41

Portfolio analysis

Answer 41

- 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