- Marketing is important to businesses as they will need to satisfy customer needs and wants to survive and also to prevent them from buying from any rival businesses.
- They will have to appeal to people by the use of price, product, promotion and place.
- The right price has to be chosen because it is crucial that the customer can afford the product and so they don’t buy from other competitors
- The right product has to be selected as the product has to be appealing to the customer in terms of size, colour, functions. This is needed to satisfy customer needs and wants
- Promotion is crucial as they need to make consumers aware of the product and to be persuaded to buy it.
- Place is also important because it has to be fitted to suit customer’s convenience
The marketing mix is a key part in marketing as it involves the success the product will produce if it is marketed properly.
- A business that sells mainly to customers and private individuals(like the general public) will be called consumer markets.
- While a business that sells to other businesses or organizations will be involved in commercial or industrial markets.
- A business usually wants to know three things;
- Market share that they hold
- Market size
- Number of competitors
- Potential for market growth
- MARKET SIZE is usually defined by;
- customer base, if there is a large customer base then that means that the market is quite diverse and has a lot of opportunity of expansion(like the fast food market) while if the market is quite niche then there will be a limited customer base and therefore small market size
- barriers to entry, if there are many natural or legal barriers of entry it restricts market size and it means that the market will have fewer suppliers as there are fewer competitors
- location, a business may operate in certain geographic area because the market there may be more successful due to the abundant potential customers there. However, now increasing globalization prevents a market from being hindered by geographical restraints.
- Volume of sales- if the value of sales in this market is very small then the market is not likely to be big as suppliers are not attracted into this market.
MARKET GROWTH- another thing that businesses will be interested in
- this refers to the increase of size that a market faces over time
- during market growth it means that more suppliers enter the market and the volume of sales go up.
- This market growth usually attracts more suppliers in because of the potential of bigger profits.
MARKET SHARE
- How much of the overall sales in the whole market a certain business owns.
- This is usually used to measure success of the business over time
- See how well the business is doing over competitors
- Market concentration looks at the degree of competition within a market;
- This is done by calculating the market shares of the largest firms in the market (like apple and Microsoft in the computer industry)
- This is given by the concentration ratio, if there is a 98% concentration ratio is means that the two top competitors(apple and Microsoft) produce for 98% of the whole industry- so this will not be a very competitive industry because the small businesses only account for 2% of the whole industry
- Such big industry-dominating businesses are called oligopolists
PRODUCT ORIENTATION
v This is used to describe a business that focuses production on the product in itself instead of producing to satisfy customer needs and wants.
v The product is produced in the belief that it will be sold, and it may be for popular products like the iPod
v Sell products that they can make, rather than selling products with elevated costs due to marketing
v Product orientation may be successful because of Say’s law (supply creates its own demand)
v Producers are not always sure if they will sell, it is highly risky because suitable market research has not been undertaken, money for R&D may be wasted as a cause of “hit and miss” strategies
v Many product orientated businesses may focus upon producing more luxury items where the production process may be scrutinized with more detail- so quality can be assured
MARKET ORIENTATION
- A business that focuses upon satisfying customer needs and wants, and produces what the customer wants rather than what they can actually make
- Usually involves market research to look into the present and future demand of the product- this is costly but it is worthwhile as it makes the product less risky and more likely to form good profits
- A market orientated business is also flexible to changes in the market, like different trends because they can be kept up to date
- A disadvantage for market orientation is the costs associated with it, there is not always a guarantee this method will be successful.
FACTORS THAT AFFECT MARKET OR PRODUCT ORIENTATION
- What type of product it sells, if it is a product that is quite homogeneous then not a lot of market research will be required.
- Organization culture- if a firm believes that customers should be placed above all then it will usually be market orientated
- Nature of barriers to entry; firms with less competition will be more product orientated and vice versa. This is because if there are many barriers of entry there will be less suppliers in the market, so consumers don’t have such a broad range of options
Social marketing
- Usually for a cause instead of selling of products
- Like the government imposed adverts to prevent people from taking drugs and smoking, this is a form of social marketing
- “an activity that affects social behavior”
- This differs from commercial marketing because people are not persuaded to buy anything, but instead informed of causes and persuaded against a certain action
- A challenge to social marketing is the unwillingness of people who change their social behavior due to habits
- Clients of social marketing agencies are usually non-profit organizations and this is how it differs from profit making organizations
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