intro to marketing

• Marketing

  Includes promotion and advertising, but they are not the same thing
• Two approaches to marketing

  • Product orientation
  • Market orientation
• Market orientation

  Relies heavily on market research to identify people's needs and wants
• Product orientation

  Relies on innovation, not on what people need or want
• Market-oriented approach

  Asks "what to sell to make people happy and increase sales"
• Product-oriented approach

  Asks "what to produce to impress people so much that they only buy us"
• Market orientation


  • Outward looking approach, focused on the market
  • Can quickly respond to changes in needs and wants
  • Expensive and time-consuming due to market research
• Product orientation


  • Inward looking approach, focused on the organization and innovation
  • Successful innovative products have almost no competition
  • Expensive and time-consuming due to R&D
• Market-oriented company


  • Coca-Cola (launching Diet Coke, Coke Zero)
• Product-oriented company

  • Apple (iPhone, iPad)
• Apple's first tablet computer (Newton) was a commercial failure despite being innovative
• Factors to consider when choosing between market or product orientation: nature of the product, barriers to entry, organizational culture
• Market orientation and product orientation are not necessarily two ends of a spectrum, they can be independent variables
• Market size


  The total volume of sales or potential sales of a product or service in a given market
• Market share

  The percentage of total market sales that a company or product has
• Market growth


  The increase in the total size of the market over time
• Product orientation


  The more product oriented a firm is, the less market-oriented they are
• Market orientation and product orientation

  Two independent variables - a firm can be highly market-oriented and highly product-oriented at the same time
• There is no one right answer, it's something to discuss with classmates
• This part of the class will cover market share and market growth
• Market size


  Total sales in the industry
• Example of market size

  • 5 firms producing chairs with total sales of 500 chairs worth $50,000
• How to define market

  The place where goods and services are traded for money, or all the people that purchase the same product, or all the products regardless of definition
• Formula for market size

  Cumulative sales of all firms in the industry
• Market share


  A firm's portion of total sales in the industry, expressed as a percentage
• Formula for market share

  Firm's sales / Total industry sales x 100
• Importance of high market share


  • Allows exploitation of economies of scale
  • Gives market power to set prices and standards
• Disadvantages of high market share

  • Not necessarily related to profitability
  • Requires constant innovation or promotion to maintain
• Market leadership is the state of being the market leader with the highest market share