IB Business Management Topic 4. Marketing - ALL

Product Orientation

A marketing approach adopted by businesses that are INWARD looking. They focus on selling products they can make, rather than making products they can sell.

Marketing plan

A marketing plan is often a formal written document which outlines in detail how the business unit intends to achieve the marketing objectives derived from the corporate objectives.

Repositioning

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

Viral marketing

A strategy to get consumers to share a marketer's message, often through e-mail or online video, in a way that spreads dramatically and quickly

B2B

Stands for business-to-business and refers to online trade conducted directly for the BUSINESS CUSTOMER rather than the end-user; an example would be Amazon.com supplying books to other book retailers

B2C

Stands for business-to-consumer and refers to online business conducted directly for consumers;p an example would be Amazon.com selling books directly to private individuals

Market

A market is a place or a process where suppliers and customers can buy and sell goods and services .

Packaging

Packaging in marketing concerns itself with the presentation of a product to a consumer.

Brand extension

Refers to the use of an existing brand name that is successful to launch a new or modified product.

Seasonal variations.

Regular and repeated variations that occur in sales data within a period of 12 months or less.

Six stages of the product life cycle

Research. Launch. Growth. Maturity. Saturation. Decline.

SEO

Search Engine Optimisation

International Marketing

Selling products in markets other than the original domestic market

Snowball sampling

Using existing members of a sample study group to recruit further participants through their acquaintances.

Viral Marketing

The use of social networking sites or SMS text messages to increase brand awareness or sell products

Telemarketing

The use of telephone systems (calls and messaging) to sell products directly to consumers (also called telesales)

Acquisitions

This is when another business buys out another by purchasing a majority stake in the target company

Takeovers

This is when another business buys out another by purchasing a majority stake in the target company

*Redesigning* - PLC extension strategy

This may involving the introduction of special features, or releasing limited editions of a product. All of which may add value in a customer's perception of a product.

E-Commerce

Trading via the internet

Characteristics of markets:

1. Market size 2. Customer base 3. Barriers to entry 4. Competition 5. Market growth rate 6. Demographics

Marketing mix

*Product*: making sure that the right products are supplied to meet the needs and wants of consumers. *Price*: Establishing the correct price to balance the needs and wants of consumers with the objectives of the firm (e.g., profit maximisation, maximising market share.) *Place*: Finding the right distribution channels to get products into the hands of customers. *Promotion*: Informing customers and potential customers about the product and persuading them to take action (i.e. buy the product).

Extension strategies and the product life cycle

- Price reductions - Redesigning - Repackaging - New markets - Brand extension

Examples of physical evidence

-The building itself -Packaging -Internet/web pages. -Paperwork (such as invoices, tickets and dispatch notes). -Brochures. -Furnishings. -Signage (such as those on aircraft and vehicles). -Uniforms and employee dress.

Marketing *objectives* of *non-profits*:

1. Building membership support and connections with new donor clients 2. Raising the profile of the cause being championed 3. Brand awareness and positive information about activities being engaged in

4 Functions of packaging

1. Customer perceptions 2. Product differentiation 3. Protection 4. Information

*Disadvantages* of *Moving-Average Method* of sales forecasting

1. Fairly complex calculation. 2. Forecasts further into the future become less accurate as the projections made are entirely based on past data 3. Forecasting for the longer term may require the use of more qualitative methods that are less dependent on past results.

Examples of marketing objectives:

1. Increasing market share - perhaps to gain market leadership 2. Increasing brand awareness 3. Increasing total sales levels - either in terms of volume or sales value 4. Development of new markets for existing products to spread risks.

The different processes involved in services marketing include:

1. Payment methods 2. Wait times (queuing) 3. Customer services 4. Delivery 5. After sales care and servicing

Advantages of successful branding

1. Price advantages 2. Recognition and loyalty 3. Distribution advantages

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

The *benefits* of being the *market leader* with highest market share include:

1. Sales are higher than those of any competing business 2. Retailers will be keen to stock and promote the bestselling brands 3. Can be used in advertising and other promotional material 4. Consumers are often keen to buy the most popular brands

*Advantages* of *Moving-Average Method* of sales forecasting

1. Useful for identifying and applying the seasonal variation to predictions. 2. Reasonably accurate for short-term forecasts in reasonably stable economic conditions. 3. Planning for each quarter in future.

Product

A broad term that refers to any physical or non physical item that is purchased by either commercial or private customers.

Franchising

A business allowing others to trade under its name in return for a fee and a share of the profits

Online Presence

A business has a dedicated website for e-commerce. This could be limited to providing information about the business and its products,and may extend to selling products online.

Direct Investment

A business setting up a production and/or distribution facilities in foreign countries

Competition-Based Pricing

A firm will base its price upon the price set by its competitors

Above-the-Line Promotion

A form of promotion that is undertaken by a business by paying for communication with consumers; e.g. advertising

Personal Selling

A form of promotional technique that relies on keen and knowledgeable sales staff directly helping and persuading customers to make a purchase

Marketing strategy

A long term plan established for meeting marketing objectives.

Advertising

A method of informative and/or persuasive promotion that has to be paid for. The ultimate aim of advertising is to raise the level of demand for a firm's products.

Price Discrimination

A pricing strategy that involves charging different prices to different groups of customers for the same product (e.g. child and adult fares at the cinema and on flights)

Guerrilla marketing

A promotional strategy that is unconventional, innovative, and low-cost. These are marketing techniques designed to get consumers' attention in unusual ways.

Sponsorship

A promotional technique which involves a business funding, supporting or donating resources for an event or business venture in return for prominent publicity

Consumer profile

A quantified picture of consumers of a firm's products, showing proportions of age groups, income levels, location, gender and social class.

Sales forecasting

A quantitative technique that attempts to estimate the level of sales a business expects to achieve, over a given time period.

Marketing Audit

A review of the firm's current marketing mix, in terms of its strengths, weaknesses, opportunities and threats.

Random sample

A sampling method that gives every person in the population an equal chance of being selected.

Quota sample

A sampling method that involves segmenting the population and then selecting a certain number (the quota) in each market segment.

Services

A service is an intangible (unable to be touched; not having physical presence) product supplied by an organisation; examples include: haircuts, photography, banking, insurance, transport, repairs and maintenance.

Sales Promotion

A short-term incentive designed to stimulate sales of a product; e.g. discount coupons, prize draws, trade fairs and free product samples

Market segment

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

Search Engine Optimization

A systematic process of ensuring that a firm comes up at or near the top of lists of typical search phrases related to that business

Position map

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

Broker

A wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation

Global Localisation

Adapting the marketing mix, including differentiated products, to meet national and regional tastes and cultures

Cost-Plus Pricing

Adding a fixed mark-up for profit to the unit price of a product

Global marketing

Adopting a standardised product across the globe as if the whole world were a single market - selling the same good in the same way everywhere

Pan-Global Marketing

Adopting a standardised product across the globe as if the whole world were a single market - selling the same good in the same way everywhere

Market segmentation by *demographics* (examples):

Age Gender Race Location Employment status

Intermediaries

Agents or firms that act as a middle person in the chain of distribution between the producers and consumers of a product

Product range

All product lines of a firm's product mix; i.e. all the products sold by the business.

Social networking

Allows participants to create a personal network of friends or business contacts and then use communication tools provided by the site to interact with those in their personal network; e.g., Instagram and Facebook.

Brand

An exclusive name, symbol or design used to identify a specific product or business.

Social Marketing

Any activity that seeks to influence social behaviour to benefit the target audience and society as a whole. It DOES NOT mean SOCIAL MEDIA (e.g. Facebook).

Unique Selling Point (USP)

Any aspect of a product that makes it stand out from those offered by rival businesses.

Marketing Strategy

Any medium-to long-term plan for achieving the marketing objectives of a business.

Direct marketing

Any promotional activity that involves making direct contact with existing or potential customers, such as door-to-door selling, personal selling and direct mail

E-tailers

Are businesses that operate predominately online (e.g. Zappos.com). They are different to retailers that operate physical stores in shopping malls and other physical outlets

Market Leaders

Are firms that dominate the market share in a particular market. The business that has the largest market share in an industry, as measured by value or volume of sales, is called the market leader.

Distributors

Are independent businesses that act as intermediaries by specialising in the trade of products made by certain manufacturers

Consumer goods

Are items bought by the final user for their own personal consumption. Examples include CONSUMER DURABLES (such as furniture, computers and cars) and PERISHABLES (such as flowers and food)

Stars

Are products in the BCG Matrix that have high or rising market share in a high growth market.

Generic brands

Are trademarks that have become synonymous with the name of the product itself. Examples include Coke, Rollerblade, Tipp-Ex and Frisbee.

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.

*Brand extension* - PLC extension strategy

Building on a brand's success to launch a new or existing version of a pproduct

Agent

Business with authority to act on behalf of another firm; e.g. to market its products

Wholesalers

Businesses that purchase large quantities of products from a manufacturer and then separate or 'break' the bulk purchases into smaller units for resale to retailers

Marketing objectives

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

Corporate image

Consumer perception of a company behind a brand.

C2C

Consumer-to-Consumer marketing takes place between consumers on an e-commerce platform such as eBay. Consumers are directly buying and selling to each other.

*Product* in the marketing mix

Consumers require the right product. This might be an existing product, an adaptation of an existing product or a newly developed one.

Physical evidence

The tangible features of a service, buildings, signage, etc.

Predatory Pricing

Deliberately undercutting competitors' prices in order to try and force them out of the market

Product line

Describes the varieties of of a particular product that serves the same purpose in a particular market. For example there are many different varieties of the BMW Mini, ranging from the basic model to the top of the range Mini Cooper S.

Product mix

Describes the variety of different product lines that a business produces.

Differentiation

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

Stratified sampling

Draws a sample from a specified sub-group or segment of the population and uses random sampling to select an appropriate number from each stratum.

Targeting

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.

*New Markets* - PLC extension strategy

Entering a new market with an existing market can extend the life of a product. This could involve a new export market or even just having the product being stocked with a new retailer.

Sampling error

Errors in research caused by using a sample for data collection rather than the whole target population.

Market Size

The total level of sales of all producers within a market.

Search Engines

Find web pages related to your request; e.g. Google, Bing and Yahoo!

Price War

Firms compete by a series of intensive price cuts

Price advantages

Firms that's sell undifferentiated products that have a variety of substitutes tend to compete on price and find it difficult to charge higher prices than their rivals.

Quantitative research

Focusses on the collection and interpretation of statistical and numerical data for market research purposes.

Qualitative research

Focusses on the comments, suggestions and opinions of respondents. Qualitative research data are not statistical but can generate in-depth findings.

Quota sampling

Gathering data from a group chosen out of a specific sub-group; e.g. a researcher may ask 100 individuals between the ages of 20 and 30 years.

Recognition and loyalty

Having a recognisable brand increases a firm's competitive advantage as there is a greater chance of the product being sold - brand loyalty or perceived trustworthiness.

Market segmentation

Identifying different segments within a market and targeting different products or services to them.

Primary research

Involves data being collected by the researcher since the dtaa does not currently exist.

Brand development

Is a long-term product strategy that involves strengthening the name and image of a brand in order to boost its sales.

Cash cow

Is a term used by the BCG Matrix to refer to any product that generates significant sales revenue due to its large market share in a slowly expanding or mature market.

Boston Matrix

Is a tool for analysing the product portfolio of a business. It measures whether products have a high or low MARKET SHARE and operate in HIGH or LOW GROWTH industries.

Market Orientation

Is an approach adopted by businesses that are OUTWARD looking. They focus on making products that they can sell, rather than selling products they can make.

Extension strategy

Is an attempt by marketers to lengthen the product life cycle of a particular product. Such strategies are typically used during the maturity or early decline stages of a product's life cycle.

Product life cycle

Is the typical process that products go through from their initial design and launch to their decline and withdrawal from the market.

Coordinated marketing mix

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

Marketing strategy

Long-term plan established for achieving marketing objectives.

*Price reductions* - PLC extension strategy

Lowering prices increase the demand for a product. Discounting can help a firm get rid of excess stocks of those products in danger of becoming obsolete.

Test marketing

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

Social media marketing

Marketing to gain internet traffic through social platforms like Facebook, Twitter, etc.

Industrial Markets

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

Consumer Markets

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

Mass marketing

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

Promotion

The use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorship and public relations to inform consumers and persuade consumers to buy

Brand awareness

Measures the extent to which a particular brand is recognised amongst potential customers or the general public. It is usually measured as a percentage; e.g., if 999 out of 1000 people surveyed recognise the brand Coke®, then Coke's brand awareness is 99.9 per cent.

Brand development

Measures the infiltration of a product's sales, usually per thousand population. If 100 people in 1000 buy a product, it has a brand development of 10.

Market Share

Measures the value of a firm's sales revenue as a percentage of the industry's total; e.g. a business with 35% market share means that for every $100 sold in the industry, the firm earns $35 of the sales revenue.

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

Non-sampling errors

Occur during the course of the survey activities, rather than from the survey itself. Such as response bias, data entry error, undercoverage etc.

Price Leadership

One dominant firm in a market sets a price and other firms simply charge a price based upon that set by the market leader.

Process

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

People

People are the organisation's employees who interact with actual and potential customers.

Market segmentation by *psychographics* (examples):

Personality Values Attitudes Interests Lifestyles

*Physical evidence* in the marketing mix

Physical evidence means allowing customers to see for themselves the quality of the service being provided. This will reduce the element of risk in buying a service as opposed to a tangible product. For example, a clean and well-presented reception area in a hotel would raise appropriate expectations in the mind of the customer.

*Place* in the marketing mix

Place refers to how the product is distributed to the consumer. If it is not available at the right time in the right place, then even the best product in the world will not be bought in the quantities expected.

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.

Loss Leader

Product sold at a very low price to encourage consumers to buy other products

*Stars* in the BCG matrix

Products with high market share in a high growth market. As the market grows, develops and matures, a 'star' product could become the next 'cash cow' for a business.

*Question marks (problem children)* in the BCG matrix

Products with low market share in a high growth market. Considerable investment in these products may be needed to capture more market share from competitors and turn them into 'stars'.

*Dogs* in the BCG matrix

Products with low market share in a low growth market. Firms need to use a product extension strategy or dispose of these products altogether.

*Promotion* in the marketing mix

Promotion must be effective - telling consumers about the product's availability and convincing them that 'your brand' is the one to choose. Packaging is often used to reinforce this image.

Below-the-Line Promotion

Promotion that is not a directly paid-for means of communication but based on short-term incentives to purchase

Direct mail

Promotional material sent directly to people's homes or place of work

Economies of Scale

Reductions in a firm's unit (average) costs of production that result in an increase in the scale of operations; i.e. by producing more

Differentiation

Refers to any strategy used to make a product appear to be dissimilar from others. Examples include quality, branding and packaging.

Product differentiation

Refers to any strategy used to make a product appear to be dissimilar from others. Examples include quality, branding and packaging.

Clicks and Mortar

Refers to businesses that combine the traditional main-street existence with an online presence. By contrast, other businesses may have just an online presence (e.g. Zappos.com)

Marketing myopia

Refers to the short-sightedness and complacency of marketers in adapting to changes in the market place. This may be especially true of product orientated businesses.

Branding

Refers to the use of an exclusive name, symbol or design to identify a specific product or business. It is used to differentiate itself from similar products used by rival firms.

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.

*People* in the marketing mix

Selling services successfully requires people who can interact positively with customers and create the correct impression to encourage them to return. This is particularly relevant in the hotel and restaurant industry.

Skimming

Setting a high price for a new product when a firm has a UNIQUE or HIGHLY DIFFERENTIATED product with low price elasticity of demand (Market Skimming)

Market Skimming

Setting a high price for a new product when a firm has a UNIQUE or HIGHLY DIFFERENTIATED product with low price elasticity of demand (Skimming)

Penetration Pricing

Setting a relatively low price often supported by a strong promotion in order to achieve a high volume of sales

Cost-Based Pricing

Setting prices based on the COSTS OF PRODUCTION rather than the level of demand or the prices set by competitors

Psychological Pricing

Setting prices that take account of customers' perception of value of the product

Promotional Pricing

Special low prices to gain market share or sell off excess stock - includes 'buy one get one free'

Demand

The amount of products that customers are willing and able to buy at each price. For the vast majority of products, as the price increases, demand will tend to fall

*Repackaging* - PLC extension strategy

The appearance of a product can significantly affect demand. Changing the appearance of the product's packaging - more attractive materials and colours - can increase demand.

Distribution advantages

The best brands are more likely to be stocked in retail outlets, given better store locations, and shelf positions. A good brand will enable the product to 'fly off the shelf'!

E-Commerce

The buying and selling of goods and services on the internet

Channel of distribution

The chain of intermediaries a product passes through from producer to consumer

Promotion Mix

The combination of promotional techniques that a firm uses to communicate the benefits of its products to customers

Marketing Plan

The document outlining a firm's marketing objectives and strategies for a specified time period.

Price Transparency

The ease with which consumers can find out the variety of prices in a market

Measuring the effectiveness of *people*

The effectiveness of an organisation's people in delivering or marketing a service can be measured in four ways: 1. Appearance (including body language) 2. Attitudes and aptitudes (capabilities) 3. Customer feedback 4. Efficiency

Packaging

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

Population

The entire set of items from which a sample is drawn; i.e. all potential customers of a particular market,

The extended marketing mix (the seven Ps model)

The extended marketing mix - the seven Ps model - is made up of seven interrelated decisions − the 7Ps. The four key ones are *product*, *price*, *promotion* (including advertising and packaging) and *place* (where and how a product will be sold to consumers). The other 3Ps largely relate to marketing services - *people*, *process* and *physical evidence*.

Brand loyalty

The faithfulness of consumers to a particular brand as shown by their repeat purchases irrespective of the marketing pressure from competing brands.

Marketing mix

The four main elements of marketing strategies: PRODUCT, PRICE, PROMOTION and PLACE. (The 4Ps)

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.

Coordinated marketing mix

The key marketing decisions complement each other and work together to give customers a consistent message about the product.

Marketing Mix

The main elements of a firm's marketing strategy: PRODUCT, PRICE, PROMOTION & PLACE.

Marketing

The management task that links the business to the customer by identifying and meeting the needs of customers profitably - it does this by promoting the right product at the right price at the right place to the right customers.

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.

Business etiquette

The manner, social and cultural context in which business is conducted. International etiquette differs from one country to another so it is important for marketers to be aware of the different protocols that exist

Target market

The market segment that a particular product is aimed at.

The Marketing Mix

The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. It is a planned mix of the controllable elements of a product's marketing plan and is commonly termed as the 4Ps: product, price, place, and promotion.

Processes

The methods of delivering or providing the service

Ethical marketing

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

Market Growth

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

Aspects of physical evidence:

The physical environment Ambiance Spatial Layout Corporate branding

Sampling

The practice of selecting a representative group (known as the sample) of a population for primary research purposes.

Exporting

The practice of selling domestically produced goods and /or services to overseas buyers to gain access to international markets

Brand value

The premium that accrues to a brand from customers who are willing to pay extra for it.

Going-Rate Pricing

The price charged is based upon a study of the conditions that prevail in a certain market and the prices charged by major competitors

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.

Marketing planning

The process of formulating appropriate strategies and preparing marketing activities to meet marketing objectives.

Distribution

The process of getting products to customers at the right time and in the most cost-effective way; it is the PLACE in the marketing mix

Supply chain management

The process of managing the network of businesses that are involved in the provision of products to the final consumer

Publicity

The process of promoting a business and its products by getting media coverage without directly paying for it

*Processes* in the marketing mix

The processes that a business has in place to satisfy customers' wants reliably and consistently form an important part of marketing services. For example, banks replacing an out-of-date debit card without the customer having to ask for one.

Market research

The range of marketing activities designed to discover the opinions, beliefs and feelings of potential and existing customers to identify and anticipate the needs and wants of customers.

Product portfolio

The range of products or strategic business units owned and developed by an organisation.

*Price* in the marketing mix

The right price is important too. If set too low, then consumers may lose confidence in the product's quality; if too high, then many will be unable to afford it.

Retailers

The sellers of products to the general public (i.e. consumers) that operate in outlets

Moving-Average Method

The simplest method of time-series forecasting; assumes that the time series has only a level component plus a random component.

Word of Mouth (WOM)

The spreading of good or bad messages about a firm, its products or its customer service. Many people argue that this is the most cost-effective form of promotion

Mergers

Two businesses (occasionally more) agree to integrate as a single organisation.

Trend

Underlying movement of the data in a time series.

Spam

Unwanted e-mail (usually of a commercial nature sent out in bulk)

Secondary research

Using data and information that has already been collected by another party; i.e. the data or information already exists.

Cluster sampling

Using one or a number of specific groups to draw samples from and not selecting the whole population; e.g. using one region or town.

Cyclical variations

Variations in sales occurring over periods of time of much more than a year.

Strategic Alliances

When two or more businesses pool their human, capital and financial resources in a SHARED PROJECT. They DO NOT form a new business with a separate legal identity

Joint Ventures

When two or more companies invest in a shared business project, pooling their resources to form a SEPARATE BUSINESS. The companies retain their separate legal identities but share the risks and returns from the joint venture