Unit 4: Marketing
✦ 4.1 Introduction to Marketing
Needs vs wants
Needs Wants
+ Essentials - Desires
+ Must have to survive - Infinite
Marketing Definition
- Identifying the needs and wants of customers
- Anticipating and predicting what customers want
- Goal: to earn profit
Market vs Product orientation
- Two alternative approaches to the company’s marketing:
Market Orientation Product Orientation
+ Look at the market to see what - Look at what they can make instead
customers need and want of what can sell
+ Outward looking - Inward looking
Advantages & disadvantages of market orientation
Advantages Disadvantages
, + Great flexibility: respond to market - Costly: Market research is needed,
change can be expensive
+ Lower risk: confident product will sell - No guarantee due to external
as it suits customers neds factors
Advantages & disadvantages of product orientation
Advantages Disadvantages
+ Quality can be assured - High research and development cost
+ More control over operations - Need of market is ignored, high risk
Market shares
- Definition: organization's share of the total value of sales within a specific industry
- Important because firms benefit from status, price setting, worry less about
competition
- Expressed as percentage
- Market share is calculated:
𝑓𝑖𝑟𝑚'𝑠 𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒
𝑀𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒 = 𝑖𝑛𝑑𝑢𝑠𝑡𝑟𝑦 𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒
· 100
- Ways to increase market share:
- Brand promotion
- Product development
- Motivating & training workforce
- Efficient channels of distribution
Market growth
- Definition: how fast a market is increasing (growing in demand)
- Market growth is calculated through:
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠𝑖𝑧𝑒 − 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠𝑖𝑧𝑒
𝑀𝑎𝑟𝑘𝑒𝑡 𝑔𝑟𝑜𝑤𝑡ℎ = 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠𝑖𝑧𝑒
· 100
✦ HL: Porters Generic Strategy (tool)
Definition
- From Harvard professor from “Competitive Advantage”
, - Shows how businesses can gain competitive advantage:
- How can companies stand out in a market?
- Can be for IA
Tool characteristic
Cost Achieving the lowest operational cost to sell products at low price
- Extremely efficient, good economies of scale
- NOT just selling at lowest price
Mass For a wide audience, everyone
Niche For a specific audience
Differentiation Companies have USP (unique selling proposition/point)
Adding value to product features
Allows businesses to charge premium prices (higher than industry
average)
Drawback: costly and time consuming
Focus Limited territory, focused on specific groups
Focus has two variants:
- Cost focus: leveraging cost advantage for specific group
- Differentiation focus: being unique in smaller markets
Cost Uniqueness
Mass Cost leadership Differentiation
Niche Cost focus Differentiation focus
Differentiation vs differentiation focus:
- Different: making yourself different from EVERYBODY
- Differentiation focus: making yourself different WITHIN specific market segment
(e.g. proving you’re unique to the whole school vs one class)
Advantages and disadvantages of cost leadership
Advantages Disadvantages
+ Eliminate competition - Low-quality products
✦ 4.1 Introduction to Marketing
Needs vs wants
Needs Wants
+ Essentials - Desires
+ Must have to survive - Infinite
Marketing Definition
- Identifying the needs and wants of customers
- Anticipating and predicting what customers want
- Goal: to earn profit
Market vs Product orientation
- Two alternative approaches to the company’s marketing:
Market Orientation Product Orientation
+ Look at the market to see what - Look at what they can make instead
customers need and want of what can sell
+ Outward looking - Inward looking
Advantages & disadvantages of market orientation
Advantages Disadvantages
, + Great flexibility: respond to market - Costly: Market research is needed,
change can be expensive
+ Lower risk: confident product will sell - No guarantee due to external
as it suits customers neds factors
Advantages & disadvantages of product orientation
Advantages Disadvantages
+ Quality can be assured - High research and development cost
+ More control over operations - Need of market is ignored, high risk
Market shares
- Definition: organization's share of the total value of sales within a specific industry
- Important because firms benefit from status, price setting, worry less about
competition
- Expressed as percentage
- Market share is calculated:
𝑓𝑖𝑟𝑚'𝑠 𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒
𝑀𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒 = 𝑖𝑛𝑑𝑢𝑠𝑡𝑟𝑦 𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒
· 100
- Ways to increase market share:
- Brand promotion
- Product development
- Motivating & training workforce
- Efficient channels of distribution
Market growth
- Definition: how fast a market is increasing (growing in demand)
- Market growth is calculated through:
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠𝑖𝑧𝑒 − 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠𝑖𝑧𝑒
𝑀𝑎𝑟𝑘𝑒𝑡 𝑔𝑟𝑜𝑤𝑡ℎ = 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠𝑖𝑧𝑒
· 100
✦ HL: Porters Generic Strategy (tool)
Definition
- From Harvard professor from “Competitive Advantage”
, - Shows how businesses can gain competitive advantage:
- How can companies stand out in a market?
- Can be for IA
Tool characteristic
Cost Achieving the lowest operational cost to sell products at low price
- Extremely efficient, good economies of scale
- NOT just selling at lowest price
Mass For a wide audience, everyone
Niche For a specific audience
Differentiation Companies have USP (unique selling proposition/point)
Adding value to product features
Allows businesses to charge premium prices (higher than industry
average)
Drawback: costly and time consuming
Focus Limited territory, focused on specific groups
Focus has two variants:
- Cost focus: leveraging cost advantage for specific group
- Differentiation focus: being unique in smaller markets
Cost Uniqueness
Mass Cost leadership Differentiation
Niche Cost focus Differentiation focus
Differentiation vs differentiation focus:
- Different: making yourself different from EVERYBODY
- Differentiation focus: making yourself different WITHIN specific market segment
(e.g. proving you’re unique to the whole school vs one class)
Advantages and disadvantages of cost leadership
Advantages Disadvantages
+ Eliminate competition - Low-quality products
