Topic 4: Marketing Flashcards
(38 cards)
What is a market?
- A place where buyers and sellers come together or interact
- A location
- A type of product
What is marketing?
Marketing is all the processes involved in identifying and satisfying a customers needs.
Business to costumer (B2C) marketing
-Customer needs to be convinced to make a purchase in the short space of time between entering the physical or online store and leaving again
Marketing Mix: What do the first four and all seven elements elements refer to in the marketing mix?
First four P’s (product, price, promotion, place)= marketing of goods
All seven P’s (… , people, processes, physical evidence)= service markets
NOTE: many businesses use the marketing mix (the seven P’s) to plan their marketing strategy
What is the marketing mix (the seven P’s) used for, in a business?
Businesses use the marketing mix to plan their marketing strategy.
What is a product oriented business (Product orientation)?
Companies/ businesses that priorities the research and development of high quality, specialized products (rather than prioritizing market research). These companies rely on their designers and engineers to come up with new ideas (to sell)
What is a patent? (Falls under product orientation)
The legal right to be the only producer and seller of a good for a period of time
What are the pros and cons of product orientation?
Pros:
-USP and quality: Distinguish a business from its competitors by providing high quality and uniques selling points (USP)
-Monopoly power: It is possible to get a patent for innovative products and designs (this means that a business that has a patent can earn large revenues as the only seller)
-Lack of competition: The businesses competitors can’t easily copy its ideas, new products= little or no competing in the market
Cons:
-High risk: No guarantee customers will want to buy the final product (leads to large amount if money invested in the product, lost)
-High costs: Requires larges sums for investment
What is a market oriented business (Market orientation)?
Companies/ businesses that place the needs and wants of the customers above everything else. Market research is the center of all decision making.
NOTE: new products are only made when the business fully understands the needs and wants of the customers
What are the pros and cons of market orientation?
Pros:
- Low risk: Increased revenues and profits
- Repeat customers: With a product- market fit (how much a product satisfies a strong market demand), customers continue coming back resulting in increased revenues and profits
- Social enterprises: Social enterprises will want to be product oriented to meet human needs or solve problems in society/ the environment
Cons:
- No USP (unique selling point): Other companies can carry out the same market research to find appropriate products, so competition will be graters
- Market research must be right: poor market research= poor product development
- Agility: Businesses must be responsive to changing market conditions (may be difficult for some companies)
What is market share?
Market share measures the value of a single company’s sales or revenues compared with the sales of all businesses in a market (measured in a percentage of a whole market)
How do you calculate for market share?
Revenue: MARKET SHARE= (product sales/total market shares)(100)= …%
# of products: MARKET SHARE= (#’s of units sold by the company/ total # of units sold in market)(100)= …%
NOTE:when calculating market share, you must specific the market you are referring to (for example: to a broad market= all restaurant, and to a narrower market= fast-food restaurants)
What is market growth?
The increase in sales revenues or sales volume in an individual market over time.
NOTE:it is important to specify the market that is being examined (broad or narrower market) and the time period
How do you calculate market growth?
-Market growth is represented in percentage change compared to a previous time period (T). The formula is:
MARKET GROWTH= (total market sales T2 – total market sales T1)/ (total previous market sales T1)(100)= …%
T1= smaller #
T2= greater #
NOTE:
-it is important to specify the market that is being examined (broad or narrower market) and the time period
-markets can grow or decline in size, generally businesses will want to sell products in markets that are growing
What is market leadership?
The product or brand with the highest market share
What are the pros and cons of market leadership (for customers)?
Pros:
- Accessing distribution channels
- Brand recognition
- Economies of scale (less per-unit production cost as a business grows)
- Price leadership
Cons:
- Consists of significant economic, social, and environmental threats (w/ large dominant companies)
What is the Boston Consulting Group (BCG) matrix aka growth share matrix?
A tool that helps businesses that have multiple products decide on their marketing strategies. Products are placed Otto the matrix depending on market share and market growth. The BCG matrix can also be a reminder to businesses to build a diverse portfolio of products.
What are the product classification in the BCG matrix?
ms= market share
mg= market growth
1. Cash cows (high ms/ low mg)- successful products in mature, slower-growing markets
2. Dogs (low ms/ low mg)- products that may be at the end of their life cycle
3. Stars (high ms/ high mg)- revenues should be growing strongly, requires significant investment to maintain growth, focuses on brand image (example: Netflix)
4. Problem child (low ms/ high mg)- often products that recently launched in response to rapidly growing revenues of competitors, considerable investment to gain market share= likely to have negative cash flow (example: Hulu)
What are the pros and cons of BCG matrix?
Pros:
-Businesses can identify which products have the potential to earn the highest revenues
- Guide some investment decisions
Cons:
- BCG matrix must be used carefully along with other methods of analysis
- Without clear data in a products market share and growth, classification of products in the BCG matrix will be subjective
What is marketing planning?
A document that outlines the entire marketing process of a business.
1. It begins with identifying corporate business goals= marketing objectives
2. Marketing budget
3. Target market (which market)
4. Market research
5. Market strategies
6. Control tools
What are niche markets?
Small part of a larger market. Customers for niche markets have very special needs or wants that are different from the larger market (example: dietary products—gluten free)
What are mass markets?
A market for goods that are produced in very large quantities. Because of economies of scale, products sold in mass markets are less expensive than niche markets (same marketing mix is used to target all consumers).
Mass products (from supermarkets) include:
- Lays chips
- Dove soap
- Oreo cookies
- Pantene shampoo
What are the pros and cons of niche marketing?
Pros:
- Less competition
- Suitable for small businesses
Cons:
- High per unit cost
- Less reach (=smaller profits)
- Little (market) growth potential
What are the pros and cons of mass marketing?
Pros:
- Large market (=potentially higher revenues)
- Lower per unit production and marketing costs (economies of scale)
Cons:
- High cost (to reach larger # of customers, businesses need to use the more expensive above the line promotion= higher upfront investment)
- More competition (more difficult to differentiate)
