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All the information for topic 4 IB Business Management HL
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Rocío Fernández Martín 1º F (IBDP)Busines management
unit 4: Marketing
4.1 Introduction to marketing
“Marketing is a process and a set of activities to meet the needs of your costumer at a
profit”
As most businesses aim to earn a profit, most marketing activities Key terms
are concerned with anticipating, identifying and satisfying the • Marketing
needs and wants of the market, in a profitable manner. • Product orientation
1. Analyze the market • Market orientation
2. Design + manufacture a product based on the market • Market size
needs/wants • Market growth
Þ Human nature means that unlimited wants exist, as • Market share
• Market leader
people will also want more things. This creates huge
marketing opportunities for businesses.
Exam tip:
What is a market? Often in the media and elsewhere
you will hear people use the term
The term ‘market’ has three different meanings: ‘marketing’ when they actually
• a place where buyers and sellers come together or interact mean ‘promotion’. Do not confuse
the two. Marketing refers to the
• a location
entire range of areas in which a
• a type of product business can adapt strategy to
meet the needs and expectations
of consumers and sell their
Market share: % of sales of one business over total sales products; the entire range of the
of an industry seven Ps. Promotion is just one
area of marketing.
,Rocío Fernández Martín 1º F (IBDP)
Þ Can be in units or in money (not the same percentage because of value)
Þ Example: Calculate the market share in uds and in $
V: 12000 uds // 240 million $ 12/50 = 24% 240/740 = 32%
R: 8000 uds // 90 million $ 8/50 = 16% 90/740 = 12%
H: 15000 uds // 200 million $ 15/50 = 30% 200/740 = 27%
T: 15000 uds // 210 million $ 15/50 = 30% 210/740 = 28%
Total: 50000 uds // 740 million $
• Knowledge of the market size (= total sales in the market) is therefore necessary in order
to calculate market share.
• Increase the market share is a common business goal, as this is an indication that their
marketing strategies have been successful. The firm with the largest market share in the
industry is known as the market
leader.
o Market share is the single most important measure used by marketers to judge the
effectiveness of their marketing strategies.
• Market share do not show how profitable a firm is.
• A large market share means that the company / business can produce large quantities and
benefit from economies of scale.
• Market share should be monitored over time in value and in volume.
• The type of products included in an industry can influence the variation of market share.
However, growing markets tend to attract more competitors. The strong demand means that
other competitors see an opportunity to offer similar products to a growing number of
customers. So, while a growing market is an opportunity for businesses, the increased
competition that comes with market growth can be an external threat.
Market size: The total size of a market, how big it is, total value of an industry. The total
sales of all firms in a market (total sales made by all business in a given market). It is indicated
in monetary units ($, €, …).
Market growth: The idea of evolution, growth of salaries, GDP…
The percentage change in the total market size over a period of time (how much the total
market has increased or decreased in value over a period of time). It is indicated in a
percentage. An increase in the market usually means more consumers buying a good / services.
Growth rate: [(n) – (n-1)] / (n – 1)
,Rocío Fernández Martín 1º F (IBDP)
Þ Example:
740 – 650
EV 740 million 2022
--------------- x 100 = 13.8 % (growth rate)
EV 650 million 2021
650
Market leader: the one that owns the more market share
Þ Shapes the industry’s trend
Þ Usually takes innovative more: first-mover advantages
Þ Easier to attract investors, customers, employees, etc
Advantages of being the market leader:
• The market leader enjoys increased sales revenues that translates to higher profits, as it
can gain economies of scale (large volumes).
• Usually, the market leader has the leading brand (used as a promotional tool), hence the
business enjoys brand loyalty, and customers are prepared to pay higher prices.
• Market leader is able to shape the industry trends whilst competitors merely follow them.
• Attract the highest-quality development partners, investors and employees.
• First-mover advantages in new markets
Þ But, business too dominant in a given market may be subject to anti-trust lawsuit
(claims of anticompetitive business practices).
Market / product orientation
Market orientation and product orientation are two alternative approaches to an
organization’s marketing strategies.
• Market orientation is an approach to marketing that focuses on meeting the specific
demands potential customers. Hence, businesses focus on making products that they can
sell, rather than selling products that they can make, i.e. they prioritize the needs of their
customers above everything else. Such information can be gathered from market research,
rather than from research and development (R&D).
o Pros:
§ Low risk. There is likely to be product–market fit and, for products to be
sold, this means increased revenues and profits.
§ Repeat customers. With high product–market fit, repeat business is more
likely, resulting in increased revenues and profits.
§ Social enterprises. These will want to be market oriented in order to meet
human needs or to solve problems in society or the environment.
, Rocío Fernández Martín 1º F (IBDP)
o Cons:
§ No USP. Other companies can carry out the same market USP:
research to find appropriate products, so competition Unique selling
proposition
may be greater.
§ Market research must be right. Poor market research could result in poor
product development.
§ Agility. Businesses must be responsive to changing market conditions; this
can be difficult for some companies
• Product orientation is an approach to marketing that focuses on making products a
business knows how to make well, rather than primarily concentrating on the needs and
desires of potential customers. Such businesses prioritize research and development
(R&D) over market research. Product orientation tends to be used by highly innovative
and tech-savvy manufacturers. Examples include Apple, Boeing, Gillette, Google, and Tesla.
o Pros:
§ USP and quality. Product orientation can distinguish a business from its
competitors by providing high quality and a unique selling point (USP).
§ Monopoly power. New products may receive a patent. This would enable
the business to be the sole producer for a period of time, resulting in large
revenues and profits.
§ Lack of competition. Developing totally new products may mean there is
little or no competition in the market, enabling large revenues and profits.
o Cons:
§ High risk. There may be no customer interest in the product because it was
not targeted at an identified need.
§ High costs. Product orientation requires large sums for investment –
money that could be used elsewhere in the business on less risky activities.
4.2 Marketing planning
Refers to the process of setting objectives and appropriate marketing strategies. They must
always be aligned with the company’s goals (profits, growth, protect shareholder value, ethical
objectives).
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