IB Business Management Marketing 4.1, 4.2 and 4.5

Product orientation

*A business approach that focuses on making the product first before attempting to sell it* Benefits: 1. associated with high-quality products 2. Can succeed in industries where the speed of change is slow 3. control over its activities, stong belief that consumers will purchase its products. Limitations: 1. Ignores the needs of the market = risks that could lead to failure. 2. Spending money on research and development without considering consumer needs could be costly with no guarantee of results. Examples: Microsoft, Ferrari, Dyson, and Apple.

Market leader

*A firm with the highest market share in a given market* Benefits: 1. increased sales, translating into higher profits. 2. business will be able to gain economies of scale. 3. could also be the brand leader which acts as a good promotional tool for customers who like to associate with popular brands. Needed: 1. Need either value or volume during a specific time period. 2. Changes in the time period can influence market share results. 3. type of product included may influence the calculations of market share.

Target market

*A group of consumers with common needs or wants that a business decides to serve or sell to* *A target market is a group of consumers with common needs or wants that a business decides to sell to while a market segment is a sub-group of consumers with similar characteristics in a given market.* The market segment that a particular product is aimed at.

Mass market

*A large or broad market that ignores specific market segments.* *A mass market is a broad market that ignores specific market segments while a niche market focuses on a narrow market segment.*

social marketing

*A marketing approach aimed at influencing a positive change in individuals behaviour and improvements in societal well-being*

Marketing plan

*A marketing plan is an essential document that concerns the development of marketing strategies that aid in achieving an organization's marketing objectives.* A marketing plan is often a formal written document that outlines in detail how the business unit intends to achieve the marketing objectives derived from the corporate objectives.

Brand

*A name, symbol, sign, or design that differentiates a firm's products from its competitors*

Unique Selling Point (USP)

*A product's feature that differentiates it from other competing products in the market.* Any aspect of a product that makes it stand out from those offered by rival businesses. Importance: 1. Helps establish a firm's competitive advantage in its product offering and, helps to attract more cusotmers. 2. leads to customer loyalty as customers can identify something special about the product in comparison to rival products, resulting in increased sales.

Market segment

*A sub-group of consumers with similar characteristics in a given market* A sub-group of a whole market in which consumers have similar characteristics.

Product

*Any good or service that is offered to the market with the aim of satisfying consumer needs or wants*

Branding

*Branding is concerned with distinguishing one business's product from another and has a strong influence on how consumers perceive a product.* Aspects: 1. Brand awareness 2. Brand development 3. Brand loyalty 4. Brand value

Centering (HL)

*Centering is a more complex method of calculating moving averages that involves the use of a four-year and an eight-year moving total establish a mid-point when calculating four year moving averages.*

Difference between commercial, social, and social media marketing

*Commercial marketing activities determine consumer needs and wants before using appropriate strategies to market the product. Social marketing aims at influencing a positive change in individual behaviour and improvement in societal well-being. Social media marketing focuses on the use of the internet though social networking websites to market a firm's product.*

Packaging / functions

*Concerns the design and production of the physical container or wrapper of a product* *Packaging is vital in the marketing mix to differentiate one product from another by designing and producing the physical container or wrapper of a product.* Functions: 1. Provides physical protection 2. Offers convenience 3. Provides infomration 4. Can help reduce security risks 5. Aids promotion

Difference between market size and market share

*Market size looks at the total sales of all firms in the market while market share is the percentage of one firm's share of the total sales in the market*

Difference between marketing of goods vs services

*Marketing of goods concerns the 4 Ps of the marketing mix while marketing of services involves 3 additional Ps of the marketing mix*

Extension strategies

*Plans by firms to stop sales from falling by lengthening the product's life cycle* *Extension strategies are implemented at the maturity or satuation stages of a product's life cycle in an effort to stop a firm's sales from falling by lengthening the product's life cycle.* Methods: 1. sell existing products in new markets 2. find new uses for the product. 3. they change the product's packaging 4. They target different market segments 5. they develop new promotional strategies.

Difference between product and market orientation

*Product orientation focuses on producing the product first before selling it while market orientation involves carrying out market research before producing and selling the product* Product-orientation: 1. Inward looking and focused on making the product first and then trying to sell it. 2. Product-led and assuming that supply creates its own demand (Say's law). Here business produces innovative products and tempt the customers to buy them. Market-orientation: 1. Outward looking and focused on carrying out market research first and then making products that can sell. 2. Market-led and focused on establishing consumer demand so as to supply products that meet consumers' needs and wants.

Season variations vs Cyclical variations (HL)

*Seasonal variations are caused by changes in demand due to the varying seasons in the year. Cyclical variations on the other hand are tied to the business cycle in an economy while random variations are notable changes that stand out from a given trend* Eg. An Ice Cream company in the UK is likely to sell more during the hot summer days than during the cold winter days.

Price skimming

*Setting a high price when introducing a new product to the market*

Penetration pricing

*Setting a low initial price for a product with the aim of attracting a large number of customers quickly and gaining a high market share.*

Brand awarness

*The ability of consumers to recognize the existing and availability of a firm's good or service*

Consumer profile

*The characteristics of consumers of a particular product in different markets based on their gender, age, and income levels, among other characteristics* A quantified picture of consumers of a firm's products, showing proportions of age groups, income levels, location, gender, and social class.

Product life cycle

*The course a product passes from its development to its decline in the market* *A product life cycle illustrates the six cycle stages that a product passes from its development, introduction, growth, maturity, saturation and decline in the market*

Marketing mix

*The key elements of a marketing strategy that ensure successful marketing of a product* *An appropriate marketing mix for a business ensures that consumers' needs and wants are sufficiently met by producing the right product, charged at the right price, available at the right place, and communicated through the right promotion channels.* The four main elements of marketing strategies: PRODUCT, PRICE, PROMOTION and PLACE. (The 4Ps) ** IF the message of the marketing mix is not clear a firm could lose sales, impacting long-term profitability and consumers may not identify with the product and therefore not buy it.

Marketing

*The management process of getting the right product to the right customer at the right price to the right place and time* *marketing is essentially about getting the right product to the right consumers at the right price at the right time. It involves working with other business functions to satisfy the needs to the customer*

Market growth

*The percentage change in the total market size over a period of time.* This can be based on the market value or volume . Market growth influenced by external factors: 1. economic growth patterns 2. technological changes. 3. changes in consumer tastes. 4. income

Market share

*The percentage of one firm's share of the total sales in the market* Market share % = (firm's sales) / (total sales in the market) * 100 Increase: 1. more successful against competitors 2. has adopted effective marketing strategies. 3. increase in profits 4. being a key player in the industry

Product positioning

*The primary focus of product positioning is to analyse how consumers perceive a firm's product compared to other products in the market in an effort for these firms to gain a competitive advantage in the market.* First step is to identify the product aspects that consumers find most important, eg quality, price, and image. Importance: 1. help firms establish close competitors or threats in the market 2. identify important gaps or opportunities in the market that the firm could fill by creating or offering new products. 3. It is a simple quick wat of presenting usually sophisticated research data. 4. It helps firms target specific market segments to best satisfy consumer needs and wants.

Market segmentation

*The process of dividing the market into distinct groups of consumers so as to meet their desired needs and wants* Identifying different segments within a market and targeting different products or services to them. Segemnted in the following ways Demograhic segmentation: 1. age 2. gender 3. religion 4. family 5. ethinic grouping Geographic segmentation: 1. regions in a country where consumers reside 2. climatic conditions Psychographic segmentation: 1. Social and economic status 2. values people's morals and beliefs

Targeting

*The process of marketing to a specific market segment* Each distinctive market segment will have its own marketing mix. Different markets can also be targeted, depending on whether they operate in niche, differentiated or mass markets.

Market size

*The total sales of all firms in a market* Measured in two ways: 1. By volume - this measures the number of goods bought by customers. It is a quanititative measure of the units sold by the business. 2. By value - this measures the amount spent bu cusomters on the total number of goods sold by businesses. It is the total revenue expressed in monetary terms.

Marketing of goods

*The use of the 4P's of product, price, place, and promotion in the marketing mix.* * In selling goods, a business can focus on specific characteristics that appeal to the consumer.

Marketing of services

*The use of the 7Ps of product, price, place, promotion, process, people, and physical evidence in the marketing mix.*

Social media marketing

*The use of the Internet though social networking websites to market a firm's product or service* benefits: 1. enables direct feedback from customers (CRM) 2. Provides low-cost methods to reach larger target audience 3. It can enhance firms brand - already large established communities = exposure. Limitations: 1. Should supplement other marketing tools 2. Difficult to stand out in the crowd

Brand loyalty

*When consumers become committed to a firm's brand and are willing to make repeat purchases over time*

Niche market

*a narrow, smaller or more specific market segment*

commerical marketing

*marketing activities that determine consumer needs and wants before using appropriate strategies to market the product* Market research carried out to determine consumer demand and business will supply what is demanded. Is value-free and does not involve making moral judgments on the buying habits of customers.

4 Ps of the marketing mix

1. Product 2. Price 3. Place 4. Promotion

7 Ps of the extended marketing mix

1. Product 2. Price 3. Place 4. Promotion 5.People 6. Processes 7. Physical evidence

Marketing strategy

A long term plan established for meeting marketing objectives.

Time series analysis (HL)

A quantitative sales forecasting method that predicts future sales levels from past sales data.

Repositioning

A strategy that involves changing the market's perception of a product or brand relative to those offered by rival firms.

Position map

A visual aid that shows customers' perception of a product or brand in relation to others in the market.

Product position map / perception map

A visual representation of how consumers perceive a product in relation to other competing products.

Market segmentation by *demographics* (examples):

Age Gender Race Location Employment status

Boston Consulting Group Matrix

An analysis method of a firm's product portfolio regarding its market share and market growth. *The BCG Matric is a growth-share matric that measures the market growth rate and relative market share of a firm's product portfolio by classifying the products as starts, problem children, cash cows or dogs* *BCG Matric strategies include harvesting, holding, building and divesting* Limitations: 1. focuses on the current market position of the firm's products, with little advice or information for suture planning. 2. It may be a time-consuming and complex exercise for businesses to define or classify their products according to market share and marker growth. 3. High market share does not necessarily equate to high profits. This is because sales revenue could be gained using competitive pricing that may have a downward effect on a firm's profitability.

Extrapolation (HL)

An extension of a trend line to predict future sales *Extrapolation is the use of a line to best fit drawn to predict future sales*

Benefits and limitations of marketing planning

Benefits: 1. helps firm identify potential problems and seek solutions. 2. Setting SMART objectives improves changes of success of a firm's marketing strategy. 3. Sharing the marketing plan with other business departments improves coordiantion and provides the whole organization 4. Devising marketing budget ensures that resources are not wasted 5. A clearly-spelled plan could improve employees' motivation and inspire confidence in them about firm's future. Limitations: 1. Marketing plansmay become outdated if organizations are not quick to consider changes in market conditions. 2. The process may consume considerable resources in terms of time, expertise, and money in designing the plans. 3. Failure to prioritize marketing objectives may make it difficult for firms to tell whether they are meeting them.

Brand development

Brand development refers to any plan that improves or strengthens the image of a product in the market. A way of enhancing the brand awareness of a product bu increasing the power of its name, symbol, or sing, ultimately leading to higher sales and market share.

Corporate image

Consumer perception of a company behind a brand.

PLC stage 6

Decline - signifies steady drop in sales and, though this, the profits of a product. Product is likely to have lost its appeal in the eyes of consumers as new models are introduced. Investment level: very low costs on promotion Profit: decreasing profit Cash flow: positive but decreasing cash flow.

PLC Stage 1

Development: where the product is desinged. Investment level: high research and development costs. Profit: none Cash flow: negative 1. generating ideas. 2. screening ideas 3. creating prototypes 4. carrying out test marketing 5. commercialization

Variation (HL)

Difference between actual sales and trend values

Targeting strategy using Differentiated marketing

Differentated marketing - or segmented marketing strategy targets several market segments and develops appropritate marketing mixes for each of these segments.

Differentiation

Differentiation is the process of distinguishing a product or business from competitors in the market or industry.

PLC stage 3

Growth - once the product is well recognized in the market, the sales volumes and so reenues start to increase significantly. * Translates into bringing profits, especially with the possibility of economies of scale or lowering unit costs. Advertising becomes persuasive as to convie consumers to buy more products and establish brand loyalty. Investment level: average to high costs on promotion Profit: some profit and rising Cash flow: positive

BCG Matrix strategies

Holding strategy - the focus here is on products with a high market share, to ensure that they maintain their current position in the market. Some investment will be needed to ensure sustained consumer demand. Building strategy - this centres on turning problem children into stars. Money from the cash cows could be invested in promoting or distibuting the product so as to increase market share. Harvesting strategy - the focus here is on milking the benefits of products with a positive cash flow. These products provide the necessaru finance, which could be used in investing in the other portfolio products. Divesting strategy - this is where the poor-performing dogs are phased out or sold off. The resources freed up from this will need to be used well in boosting the performace of the toher products in the protfolio.

Brand value

How much a brand is worth in terms of its reputation, potential income, and market value

Product life cycle stages (extension strategies needed)

Introduction - the basic product is marketed. Growth - Product improvements or new product development plans start. Maturity - New product development is at an advanced stage. Extension strategies are introduced in some cases. Saturation - Extension strategies are critical to maintain sales. Decline - weak products are withdrawn from the market.

PLC Stage 2

Introduction - the launch stage of the product on the market. Sales are low because consumers are not yet aware of the product's existence. High prices or *price skimming* may be used for brand-new technological products. Where there are many competitors *penetration pricing* (low prices) may be used to increase awareness of a product Investment level: high costs on promotion Profit: none or negative Cash flow: negative but improves with sales.

Coordinated marketing mix

Key market decisions complement each other and work together to give customers a consistent message about the product.

Test marketing

Marketing a new product in a geographical region before the full scale launch.

Mass marketing

Mass marketing is an attempt to appeal to an entire market with one basic marketing strategy using mass distribution and mass media.

PLC stage 4

Maturity - sales continue to rise but they slow down. Product is well established and has stable market share resulting in positive cash flow. Competitors begin to enter the market and take advantage of these profits. Hence some use promotional pricing strategies to keep competition at bay. Investment level: lower costs on promotion Profit: high profit; reaches its peak Cash flow: positive

Niche marketing

Niche marketing targets specific and well-defined market segments (i.e., niche markets). Concentrating all marketing efforts on a small but specific and well defined segment of the population

Process

Part of the extended marketing mix which refers to the methods and procedures used to give clients the best possible customer experience.

Market segmentation by *psychographics* (examples):

Personality Values Attitudes Interests Lifestyles

Product differentiation

Product differentiation is the marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior.

Customer Relations Management (CRM)

Refers to the use of people in the marketing mix. CRM focusses on what can be gained during the lifetime of a positive relationship with customers.

Marketing objectives must be:

SMART - Specific Measurable Achievable Relevant / realistic Time-specific

Moving average (HL)

Sales forecasting method that identifies and emphasizes the direction of a trend *Moving averages greatly assist in developing trend lines that help to smooth out any fluctuations from sales data*

PLC stage 5

Saturation - when many competitors have entered the market and saturated it. Sales are at the highest point and begin to fall. Use of extension strategies to stabilize their market share and sue high levels of promotional activities such as aggressive advertising in an effort to maintain sales. The widest range of geographical distribution outlets has been established to get the products to consumers. Investment level: cost focus on extension strategies. Profit: high and mostly stable profit Cash flow: positive

Packaging

The eighth 'P' in the marketing mix which focuses on the ways in which a product is presented to the consumer.

The four Ps

The four P's of the marketing mix are product, price, promotion, and place. Product: 1. good product or service is offered 2. should aim to satisfy the needs and wants of consumers. 3. Consumers interests should be considered 4. special qualities allow for a unique selling point it proposition. Price: 1. amount of consumers are charged 2. indicates the value that is perceived as a product. 3. appropriate price can be difficult due to internal and external factors influencing purchasing behaviors. Promotion: 1. various ways in which consumers are informed about and persuaded 2. communications methods used to attract consumers. Place: 1. products location or channels of distribution 2. in shops, over the internet, wholesalers, retailers, and agents.

Marketing objectives

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

Physical evidence

The image portrayed by a business (or perceived by customers) regarding its observable and tangible features such as the cleanliness and physical size of a business or the presentation of its staff.

Main Marketing Objective for For-Profit organizations vs for non-profit organizations

The main marketing objective for for-profit organisations is to identify, design, and develop marketing strategies that are profitable to the business. On the other hand, the marketing objective for Not for profit organisations (NPOs) is mostly for social marketing reasons

Ethical marketing

The moral aspects of a firm's marketing strategies. It can be encouraged by the use of moral codes of practice.

Segmentation

The process of categorising customers into distinct groups of people with similar characteristics (such as age or gender), and similar wants or needs for research and targeting purposes. Advantages: 1. helps business identify existing gaps and new opportunities in domestic as well as international markets. 2. Designing products for a specific group of consumers can increase sales and, through this, profitability. 3. Segmentation minimizes waste or resources by businesses through identifying the right consumers for their products. 4. By differentiating their products, business could diversify and spread their risks in the market and so increase market share. Limitations: 1. can be expensive in terms of research and development, production, and promotion as a firm attempts to reach a large segment of actual and potential consumers.

Marketing planning

The process of formulating marketing objectives and devising appropriate marketing strategies to meet those objectives.

Sales forecasting (HL)

The process of predicting the future of a firm *Sales forecasting is a quantitative process of estimating a firm's future sales levels and trends over a specified period of time*

BCG Stars

The products with high marekt growth and high market share. They are sucessful products in the market and generate high amounts of income for the business. However, they need high levels of investment to sustain their rapid growth and status in the market, especially in fast-growing market where competing firms can easily gain market share by attracting new cusotmers.

BCG Problem children or Question marks

These are product with high market growth and low market share. They are a concern to businesses because the large amount of money needed to increase their share in the market. Moreover, the high market growth could mean that the products are operating in a firecelt competitive market and need a good marketing strategy of they are to succeed. Business should think hard and be very selectrive about which problem children they should develop into stars and which ones should be eliminated.

BCG Dogs

These are products that have low market share and low market growth. they operate in markets that are not growing or in declining markets and therefore generate little income for the business. They offer low future prospects for the firm and may need to be replaced. Businesses with many of these products mat be faced with cash-flow problems if they continue sustaining them.

BCG Cash Cows

These are the products that have low market growth and high market share. They compromise well-established products in a mature market and, as a result, businesses will invest less to hold on th their market share. The product sales are high and very profitable so they generate a good amount of cash for the business. As the products have a strong presence in the market, businsses can even charge slightly higher prices to increase their profit margins.

Targeting strategy using undifferentiated marketing

Undifferentiated marketing - also known as mass marketing, where a firm ignores the differences in the specific market segment and targets the entire market. Instead of targets the common needs or wants of consumers in the market and aims to sell their product to a large number in order to maximize their sales.

Market orientation

a business approach of first establishing consumer demand through market research before producing and selling a product. Examples: Ford, Sony, Samsung and Nokia. Benefits: 1. Increased confidence that products will sell. 2. Access to market information allows for quicker response to changes. 3. Firms in stronger position to meet challenge of new competitors entering market, due to regular feedback. Limitations: 1. Market research can be costly (not budget friendly) 2. Could be difficult to meet all consumer needs with avaliable resources. 3. Uncertainty about future = negative influence on market-planning strategy.

Social marketing

a marketing approach aimed at influencing a positive change in individual behavior and improvements in societal well-being Examples of social marketing involves public health campaigns, for example anti-smoking campaigns. Others include the promotion of recucling, clean air and water. Advantages: 1. gives firms a competitive advantage as consumers percieve such firms to be ocially repsonsible and therefore buy products from them. 2. Firms can charge premium prices for providing goods that society is deriving benefits from.

Targeting strategy using concentrated marketing

concentrated marketing or niche marketing - this is a strategy that appeals to smaller and more specific market segments. It is a good strategy for smaller firms that may have limited resources.

Marketing budget

including the finance required to fund the overall marketing strategy.

Key strategic plans

which are the steps that provide an overview of how the marketing objectives will be achieved.