business marketing 1.1

• Market


  A place that buyers and sellers will come together to exchange goods and services. Normally an exchange of money at a set price
• Niche market


  A smaller part of a larger market in which customers have more specific needs and wants.
• niche market characteristics


  - production is usually on a small scale

  - can charge premium prices

  - low volumes but high profit margins

  - few competitors but limited number of potential customers

  - compete in quality and customisation in order to succeed

  -promotional media easily targeted
• mass market


  a market that targets a large population with a rather generic product.
• characteristics of a mass market

  - production is on a large scale

  -potential for high sales revenue

  -investment in capacity

  - lots of competition

  -promotion involves mass market techniques like newspapers and TV

  -competitive pricing

  -economies of scale

  -innacurate targeting
• brand names


  given to products to distinguish them from other products on the market. used mostly by those within the mass market sector of a whole industry.
• what does marketing involve

  - Understanding customers' needs

  - Understanding the dynamics of the market

  - Developing successful products

  - Promoting the business and its products
• risk


  The chance of loss from an event that cannot be entirely controlled. risk exists because entrepreneursgive up resources that can be lost if a business goes bust.
• uncertainty


  businesses operate in an overcharging environment and are subject to changing external factors like legal, Economic and social factors.
• dynamic market


  markets are every changing, despite the stable periods as they are run by their customers which constantly change the trends that drive the dynamic changes in the market.
• reasons markets can change

  - innovation

  -social change

  -demographic changes

  -economic growth

  -changes in legislation
• how are businesses successful in dynamic markets?

  - be flexible in the way they operate

  -carrying out market research to understand customers

  -investment in technology people and products

  - continuous improvement (desire to improve)
• market size


  total value of volume of sales in a market
• marketshare


  the proportion of a particular market held by the business
• how is marketshare calculated?


  sales of a business

  --------------------- x 100

  total sales in Market
• market growth


  the key indicator for existing and potential market entrants and can be calculated using value / volume:

  
  

  change in market size

  ------------------------ x 100

  original market size
• market research


  the collection and analysis of information aimed at understanding the behaviour of consumers in a certain market to support the implementation of a market strategy
• primary market research


  research collected first hand that did not exist before and is

  +specific to the needs of the business

  +up to date

  +reliable

  +better for two way communication and follow up questions

  -more time consuming

  -difficult to conduct a large sample size
• examples of primary research

  questionnaires

  interviews

  focus group

  trials

  consumer panels

  customer observations
• secondary market research


  +easily accessible and good starting point

  +fast and less time consuming

  +often better for quantitative data

  -some may be free but detailed reports may be expensive to purchase

  - not always up to date

  - not specific to that business
• Examples of secondary research


  Market research reports

  Competitors

  Websites

  Government statistics

  Newspaper articles

  social media

  census
• products orientation


  inward looking approach to new product development where the key focus is what products can be made and the production process.
• market orientation


  Outward looking approach to a new product development based on what customer are asking for or want. focuses on understanding consumers wants and needs.
• limitations of market research

  - biased

  - small samples limit reliability of research

  -casualty can be hard to identify

  -time consuming (costly)
• uses of market research

  Cash-flow forecasting

  workforce forecast

  sales forecast

  product development

  budgeting

  production forecast

  developing marketing activities like a promotional campaign
• sampling


  The process of selecting representative units from a total population. usually a representative group from target market
• benefits of sampling


  - quicker than collecting from the whole population.

  -the bigger the sample size the more accurate
• types of sampling


  random = chosen by chance, everyone has an equal chance of being chosen

  
  

  Quota = segmented into subgroups before selecting respondents representative of that subgroup

  
  

  Stratified= segmented into subgroups them choose at random one from each group
• how does ICT support market research

  specific IT tools can include:

  - collecting data through websites (cookies)

  - social media/networking

  - analysing information in databases

  - collecting data via loyalty cards
• Market segmentation


  the process of dividing customers within a market into distinguishable groups based on their characteristic =s and needs to allow positioning of the business and customer targeting to take place.
• benefits of market segmentation

  + differentiate from competitors

  +develop and build your brand

  +identify and satisfy the needs of a specific group of customers

  + reach customers with relevant marketing activity

  +focus of business activities

  +build loyalty to brands and products

  +Focus on most profitable market
• types of market segmentation

  -demographics= identifies the population via characteristics or demographic profile including age and gender

  geographic= identifies market based on where customers live includes weather, culture and infrastructure

  income= identifies subgroups of a market based on levels on income and occupation. occurs often via socioeconomic grouping (A-E ranking of jobs)

  Behavioural- subgroups based on patterns of consumer rather than characteristics like the reasons for the purchase and how often its purchased.
• Market positioning


  how a business position itself within a market in relation to its competitors
• market maps


  technique used to understand how products/businesses are viewed relative to competitors based on two characteristics

  
  

  + helps a business to decide whether to set up in a particular market

  + useful for comparing similarities and differences between businesses

  +gain understanding of competition

  +gain understanding if customer perceptions

  - only considers two variables

  -different stakeholder may have different opinions of where the business should be placed
• competitive advantage


  a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition.

  
  

  It exists where a business creates value for its customers that is greater than the costs of supplying those benefits and that is then greater than that of a rival.
• differentiation


  the process of making products or businesses different from a competitor. often called focussed differentiation in a niche market.
• How is sustainable competitive advantage obtained?

  innovation - ability of a business to create new unique processes and products

  
  

  architecture- referring to the relationships within a business creating synergy and understanding between suppliers, customers and employees of a business

  
  

  reputation- brand values are hard to replicate and can take years to develop
• ways of adding value

  -branding

  -better design and features

  -good customer service

  -speed of service

  -packaging

  -frequent buyer offers

  -customisation
• benefits of added value

  + brand loyalty

  +higher prices

  + more profit

  + less competition

  - more costs associated
• branding


  Involves the creation of an identity for the business that distinguishes that form and its products from others. it can add values allowing higher prices and brand loyalty. often coming with repeat business.

  
  

  examples of branding are

  - name

  -logo

  -objectives

  - shape

  -colour

  -celebrity endorsement