Unit 3 Flashcards
Def. Marketing
- Identifying the wants and needs of consumers and satisfying those needs better than the competitors
- By using (4P’s) the right product design, pricing, promotion and placement.
Def. Market
- The place where buyers and sellers exchange
- The group of consumers that is interested in a product and has the resources to purchase the product.
Def. Consumer markets
Markets of goods and services bought by the final user of them
Def. Industrial markets
Markets of goods and services bought by business to be used in the production process of other products
Def. Human Needs vs Wants
- Needs are basic requirements that an individual would have e.g water, food
- Wants are things an individual wouldn’t need for survival, but satisfies the human’s desires and human needs to an extent.
Is product value and product satisfaction the same? Why?
No. High value products, as in expensive products with high cost to produce may not satisfy the individual. Customer satisfaction comes from a balance between high value and reasonable pricing.
Def. Marketing objectives
The goals set for the marketing department to help the business achieve its overall objectives. e.g Increasing market share
Def. Marketing strategy
Long-term plan established for achieving marketing objectives.
How to determine whether the marketing objective is effective?
Have to be SMART.
Why are marketing objectives important?
- Provide a sense of direction for the department
- Progress can be monitored against the objectives
- Can be broken down into smaller objectives to show a clearer path
- Form the basis for marketing strategy.
What are the links between the marketing department and other departments? (3)
- Marketing -> Finance: Help construct budgets from sales forecasts.
- Marketing -> Human resources: if there’s a need for additional staff.
- Marketing -> Operations: Planning on resources needed for for e.g new product development.
Def. Market orientation
An outward-looking approach basing product decisions on consumer demand, as established by market research. Market orientated products are designed based on the consumer’s satisfaction. e.g toothbrushes.
What are the benefits of market orientation?
- Less chance of newly developed products to fail
- Likely to survive longer with higher profits if consumer needs are met.
- There’s constant feedback from consumers => research never ends => more chances for developing updates.
Def. 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. Product orientated business concentrate their efforts on efficiently producing high-quality goods.e.g Medical machinery.
Def. 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. It is still based on market research, but doesn’t satisfy all of the consumers. An in between of product and market orientated businesses.
Def. Demand
The quantity of the product that consumers are willing and able to buy at a given price in a time period.
Def. Supply
The quantity of a product that firms are prepared to supply at a given price in a time period.
What’s the use of determining demand and supply?
It determine the equilibrium price from the ‘demand and supply analysis’.
What is the relationship between demand and price and how can it be affected?
- Demand varies with price. The higher the price, the lower the demand: as the higher the price the less is sold.
- The level of demand could also be affected by: changes in consumer incomes, changes in population size and structure, changes in substitute and complementary goods, fashion and tastes changes, advertising and promotion strategies.
- Figures in the text book pg. 249
What is the relationship between supply and price and how can it be affected?
- Supply varies with price. The higher the price, the higher the supply: because the higher the price, the more willing firms are to supply the product.
- The level of supply could also be affected by: Costs of production, Taxes imposed, Subsidies, weather conditions, advances in technology.
- Figures in the text book pg. 250
Def. Equilibrium price
The market price that equates supply and demand for a product.
How is equilibrium price determined?
When demand and supply are combined, where the 2 lines intersect is the equilibrium price.
Def. Market location
Geographically where the market is located. Local markets would have limited sales potential e.g florist shops. Then regional markets have more, then national markets, then international markets that have the greatest sales potential.
Def. Market size
The total level of sales of all producers within the market. It can be measured in two ways: The volume of sales (units sold) or the value of goods sold (revenue).
Why is the size of market important?
- The marketing managers can assess whether a market is worth entering or not.
- Firms can calculate their own market share.
- Growth or decline of the market can be identified.
Def. Market Growth
The percentage change in the total size of a market (volume or value) over a period of time.
Def. Market share
The percentage of sales in the total market sold by one business. Market share % = (firm’s sales in time period/Total market sales in time period) x 100
What are the benefits of high market shares?
- Sales are higher which could lead to higher profits
- Retailers will be more keen to stock and promote best selling brands
- Being a ‘market leader’ can be used as promotional material.
How can a firm’s market share decrease even though its sales are rising?
The total market sales are increasing at a faster rate than the firm’s sales => the market share will fall.
How can a business add value to a product/service?
- Create a luxurious retail environment.
- Using high quality packaging
- Promotion and branding
- Create a unique selling point (USP)- the special feature of a product that differentiates it from competitors’ products.
Def. Niche marketing
Identifying and exploiting a small segment of a larger market by developing products to suit it. Usually sell expensive and high status products. E.g Channel.
Def. Mass Market
Selling the same products to the whole market with no attempt to target groups in it. E.g Toothpaste.
What are the advantages and disadvantages of niche markets?
Advantages:
• Small firms can survive in markets that are dominates by large firms
• With little to no competitors, they can have high pricing (monopoly).
• May be bought as status products instead for their performance.
Disadvantages:
• Do not allow economies of scale -> higher costs
• Any decisions could have a high risk because there is too little consumer potential.
Def. Market segment
A sub-group of a whole market in which consumers have similar characteristics.
Def. Market segmentation
Identifying different segments within a market and targeting different products or services to them. Successful segmentation requires a business to have a clear consumer profile.
Def. Consumer profile
A quantified picture of consumers of a firm’s products, showing age groups, income levels, location, gender and social class.
What are the 3 commonly used bases for segmentations?
- Geographic differences
- Demographic differences
- Psychographic differences
What are geographic differences?
- Consumer tastes change depending on where they are located.
- Geographical differences may occur from cultural differences (e.g alcohol cannot be promoted in Arab Muslim countries) or climate (e.g considering heating or refrigerating products).
What are demographic differences?
- Demography is the study of population data and trends.
* Demographic factors are age, sex, family size, ethnic background, social class…
What are the psychographic factors?
• To do with differences between people’s lifestyles, personalities, values and attitudes.
What are the advantages of market segmentation? (4)
- Businesses can define their target market to design and produce goods that would lead to increased sales
- Identifies gaps in the market to be fully exploited.
- Focusing on target groups to avoid wasting finance.
- Small firms can compete in smaller market segments instead of the whole market
What are the disadvantages of market segmentation? (3)
- Research and development costs are high
- Promotional costs would be higher because of the variation of them
- Production and stock holding costs are higher because there’s more variation in products
Def. Market Research
This is the process of collecting, recording and analysing data about the customers, competitors and the market.
What are the needs of market research? (4)
- To reduce the risks associated with new product launches
- To predict future demand changes
- To explain patterns in sales of existing products and market trends
- To assess the most favoured designs, flavours, styles, promotions and packages for a product.
What’s the market research process? (1 ,2)
- Management problem identification: by setting out the problem accurately, the process can be directed accurately, without any unnecessary data gathered. e.g. Why are our sales falling?
- Research objectives: Must be set in the way that would provide all the information needed once accomplished. E.g. How many are likely to buy are products in country X?
- Sources of data - primary and secondary research.
