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IB Business Management HL - Marketing Part 1

Terms in this set (63)

Marketing
The management task that links the business to the customer by identifying and meeting the needs of customers profitably. It does this by getting the right Product at the right Price at the right Place with the right Promotion.
What are some characteristics of Markets?
- Market Size
- Market growth
- Ease of entry
- Differentiated or Homogenous goods
- Market Segmentation
Market size
The total level or value 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.
Ease of entry
the lack of barriers for the establishment/development of new competitors in a market
Homogeneous products
goods that are physically identical or viewed as identical by consumers
Segmentation
Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviours
Target Marketing
focusing marketing activity on particular segments of the market
Mass marketing
selling to the whole market using a the same standardised product and the same marketing activities with no attempt to target specific groups inside it
Consumer goods
Tangible physical products marketed to end users
Consumer Services
Intangible provision of an activity to end users
Whats different about services in comparison to goods?
- Services are consumed immediately
- Hard to compare and assess
- Must be right the first time
- People are extremely important for success
Marketing on Services should focus on what factors?
RAISING PERCEIVED VALUE by
- Building trust
- Time for delivery of a service
- Deliverability of results
- Relationships (emotional involvement)
Market orientation
an outward-looking approach basing product decisions on consumer demand, as established by market research
Pros and cons of Market-orientation
Pros
- Less risk bringing product to market
- Meeting consumer needs in the long-term
- Constant feedback, constantly reaching needs
Cons
- Meeting all needs is expensive
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
Social marketing
An approach which considers not only the demands of consumers, but also the effects on all members of the public involved in some way when the firm meets the demands
What does Social Marketing imply for a company
- Balancing profits, consumer wants and society's interests
- Focuses on long-term welfare
- Satisfying consumer needs in a way which enhances society's welfare
- 'Socially responsible' competitive edge
- Can lead to a higher price as it benefits consumer welfare (USP)
Commercial Marketing
Satisfying customer's needs for profit
Market Share
The percentage of sales sold by one business in the entire market
Market Share Formula
( firm's sales in time period / total market sales in time period ) x 100
Market Leadership
when a business has the highest market share of all firms that operate in that market
Pros of being the Market Leader
- Sales are highest, beats competitors
- Retailers will be keen to stock and promote
- Can be sold to retailers at a higher price
- Used as a promotional advantage
- Strong bargaining position with creditors
- Recruitment often easy
- Easier to attain finance
Cons of being the Market Leader
- Puts business under performance pressure
- Media will keep an eye on everything
- Could take attention away from profitability
Marketing Objectives
the goals set for the marketing department to help the business achieve its overall objectives
In order to be effective, what does the marketing objectives need to be?
- Fits in with the overall business aim and mission
- Be determined by senior management
- Be realistic, motivating, achievable, measurable and clearly communicated
Why are marketing objectives important?
- Provides a sense of direction
- Progress can be measured and assessed
- Provides a basis for marketing strategies and allows management by objectives
What are some typical For-Project marketing objectives?
- Market leadership
- Increased sales volumes
- Increased return purchases
- Decreased customer acquisition costs
What are some typical Non-Profit marketing objectives?
- Maximise revenue from trading activities
- Increase recognition
- Promote to a wide audience
Marketing Planning
the process of formulating appropriate strategies and preparing marketing activities to meet marketing objectives
What does Marketing Planning include?
- Smart objectives
- Sales forecasts
- Marketing Budget
- Marketing strategies
- Detailed tactics
Pros of Marketing Planning
- Provides a focus and a road map of the stages
- Strategies linked to SMART objectives will have less risk
- Finance will be controlled and less fluctuated
- Integrates all departments as all is needed to plan (interrelationship between business functions)
- Planning ahead ensures all marketing mix is integrated
Cons of Marketing Planning
- Plans must be revised to meet changing internal and external factors
- Plans are insufficient on their own
- Marketing plans needs to be based on up-to-date assessments of the market
Marketing Mix
the key decisions that must be taken in the effective marketing of a product
What does the marketing mix include?
Product, Price, Place, Promotion
What is included in the extended marketing mix?
People, Process, Physical evidence
Coordinated Marketing Mix
Key market decisions complement each other and work together to give customers a consistent message about the product.
Market Segment
a sub-group of a market made up of consumers with similar characteristics tastes and preferences
Target Market
The market segment that a particular product is aimed at.
Market Segmentation (Differentiated marketing)
identifying different segments within a market and targeting different products or services to them, this is a type of niche marketing
What are the different way of segmentation?
- Geographically
- Demographically
- Psychographically
Consumer profile
A quantified picture of consumers of a firm's products, showing proportions of age groups, income levels, location, gender and social class.
Pros of Market Segmentation
- Defines target market and allows a more precise good
- Identifies gaps in the market for exploitation
- Avoids costs of marketing to entire market
- Small firms unable to compete in mass markets
- Price discrimination can be used for profits
Cons of Market Segmentation
- R&D and production costs may be higher to market several different products for different groups
- Promotional and storage costs may also increase
- May lead to lack of flexibility due to specialisation in those segments, hence if patterns change, it will be problematic
Niche market
A small specific part of a larger market with distinct characteristics that costumers share
Niche Marketing
identifying and exploiting a small segment of a larger market by developing products to suit it
Pros and Cons of Niche Marketing
Pros
- Able to thrive in a market already dominated
- Filling a niche gap can offer high prices and high profit
- Opens opportunities to create status and image
Cons
- Do not allow economies of scale
- Risk of small number of consumers
Mass Market
a market for products that are often standardised and sold in large quantities
Product Positioning/Perception Map
A graph that analyses consumer perceptions of a group of competing products in respects of two product characteristics
What is a Product Positioning Map used for?
- Identify potential gaps in the market
- Understand the characteristics of the niche to promote it correctly and heavily
- Determine whether a repositioning should be attempted
Repositioning
Changing a product's image from customer perspectives in respects to two characteristics
Unique Selling Proposition/Point (USP)
A factor that differentiates a product from its competitors, such as the lowest cost, the highest quality or the first-ever product of its kind
Pros of having a USP
- Effective promotion
- Opportunities to charge higher prices due to exclusive design or service
- Free publicity from media reporting USP
- Typically higher sales
- Consumers more interested and eager to identify with it as it's different
Methods that a business could differentiate and their drawbacks
- Price (may lower profit margins OR may exclude certain income levels)
- Trust (difficult to form)
- Ethical Stance (if it's not genuine, it will disrupt trust)
- Convenience (too widespread, not really a USP anymore)
- Product features (R&D and constant development needed)
Sales forecasting
predicting future sales levels and sales trends
Pros and Cons of Sales Forecasting
Pros
- Reduces risks
- Allows planning for strategic decisions
Cons
- Continous changes in external factors, the unforeseen nature of sales
What is the process called which uses historic data for Sales Forecasting?
Extrapolation
Moving Averages
a forecasting method that uses an average of the most recent periods of data to forecast the next period; it smoothes out the fluctuations of sales to identify a clearer trend
Trend
Underlying movement of the data in a time series.
Cyclical Variations
Variations in sales occurring over periods of time of much more than a year.
Random Variations
May occur at any time and will cause unusual and unpredictable sales figures; e.g. exceptionally poor weather, or negative public image following a high-profile product failure.
What are the pros of using Moving Averages?
- Useful especially to detect seasonal trends
- Reasonably accurate for short-term predictions in a stable economy
- Identifies average seasonal variations which allows planning (e.g. how many employees to hire)
What are the cons of using Moving Averages?
- Quite complicated to calculate
- Inaccurate in the long-term as it disregards qualitative data and it's too reliant on historic data
- New businesses will not be able to do this due to insufficient information
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