THEME ONE - MARKETING AND PEOPLE
1.1.1 The market
1.1.2 The dynamic nature of markets
1.1.3 Market positioning
1.2.1 Demand
1.2.2 Supply
1.2.3 Markets
1.2.4 Price elasticity of demand
1.2.5 Income elasticity of demand
1.3.1 Product/service design
1.3.2 Branding and promotion
1.3.3 Pricing strategies
1.3.4 Distribution
1.3.5 Market strategy
1.4.1 Approaches to staffing
1.4.2 Recruitment selection and training
1.4.3 Organisational design
1.4.4 Motivation
1.4.5 Leadership
1.5.1 Role of an entrepreneur
1.5.2 Entrepreneurial motivates/characteristics
1.5.3 Business objectives
1.5.4 Forms of business
1.5.5 Business choices
1.5.6 Entrepreneur to leader
1.1.1 THE MARKET
Mass markets and niche markets…
- characteristics
- market size and market share
- brands
Dynamic markets…
- online retailing
- how markets change
- innovation and market growth
- adapting to change
How competition affects the market
The difference between risk and uncertainty
Brand name - a name, term, sign or symbol that allows consumers to identify a business
E-commerce - conducting business transactions online
Online retailing - retailing of goods online
Market - a set of arrange to that allows buyers and sellers to communicate and trade in a particular range of goods and services
Marketing - management process involved in identifying, participating and satisfying customer requirements profitably
Market share - proportion of total sales in a particular market for which one or more businesses or brands are responsible
Mass market -large market targeting a range of customers
Niche market - small market targeting a small range of customers
Marketing involves a range of activities to support the process of communicating with customers with the aim of selling products
and meeting their needs
Type of market PROS CONS
MASS - a very large market in which high sale volumes fierce competition
products with mass appeal are targeted more customers requires a USP
examples include McDonalds, BK can build a strong market presence less room for profits to be made
NICHE - a smaller section of a larger less competition undiverse product portfolio
market where businesses aim to satisfy specific expertise not scalable
specific market needs by creating higher profit margins fewer potential customers
carefully tailored products examples customer loyalty
include Doe Lashes and Banana Guard
Individual markets - in some industries tech has allowed businesses to profile individuals and customise their products
accordingly such as online bespoke greeting cards
Dynamic markets - one that is subject to rapid or continuous change
Adapting in a dynamic market
- being flexible in the way that the business operates
, - market research to have better understanding of the market
- investment in new technology and products
A brand is a good or service that has something which is unique and recognisable
- strong if easily recognisable
- high customer loyalty
- can charge higher prices if well known such as Apple
Added value is the process of making a product/service more desirable to consumers so that firms can increase the price that the
consumer is willing to pay.
Brands strongly influence the position of the business within its market…
- companies in mass markets use branding to differentiate themselves from competitors
- companies in niche markets use branding to market to a specific, small group of consumers
- strong brands are more likely to be able to charge higher prices for their goods than weaker brands
- the perceived quality of products from strong brands is higher than that of products from weaker brands
Dynamic markets - markets that experience rapid and continuous change
Examples of dynamic markets - Social trends, changes in technology, competitive environment, consumer tastes
Many markets are becoming more competitive and change is inevitable
- businesses which don’t adapt are less likely to survive in the long run (e.g. the mobile phone market is a good example of
a dynamic market, Blackberry Phones did not adapt therefore iPhones dominated them)
Businesses with monopoly power (e.g. Amazon) may not face the same dynamic pressures as businesses in more competitive
markets! Similarly, others change very slowly and are relatively stable such as eggs and milk
Adapting successful businesses adapt by…
- Recognising and adapting to market changes allows businesses to thrive in dynamic markets
Strategies to adapt to change include…
- create a flexible business structure, especially in terms of operations and people management
- meet customer needs by carrying out market research and communicating with customers
- invest in new products, processes and staff training
- innovate to gain the first mover advantage
How does competition affect the market?
Competition can be direct or indirect
- DIRECT competition occurs when the business is targeting customers with the same product as a competitor
- INDIRECT competition occurs when forms sell different products but compete with each other for the customers
disposable income e.g. cinema and theatre companies are indirect
Competition can have many benefits for the customers such as
- businesses offer lower prices to gain more customers
- businesses produce better quality products to grab attention of customers
- businesses provide better customer service to retain customers
Market size and market share
Market size can be measure through volume and value of sales
Market share is the proportion of a market that is taken by a business, product or brand and can be used to measure success
Market share = sales of a business / total sales in the market x 100
Factors causing change
- innovation
- social change
- legislation change
- economic growth
- demographic changes
PESTLE
P - political
E - economic
S - social
T - technological
L - legal
E - environmental
What is the difference between risk and uncertainty?
Risks can be calculated and prepared for whereas uncertainties cannot as they are unexpected events.
,1.1.2 MARKET RESEARCH
Product and market orientation
Primary and secondary market research data (quantitative and qualitative) used to…
- identify and anticipate customer needs and wants
- quantify likely demand
- gain insight into consumer behaviour
Limitations of market research, sample size and bias
Use of ICT to support market research…
- websites
- social networking
- databases
Market segmentation
Market research - involves gathering information about customers’ attitudes, behaviour and wants in relation to a product or
service.
Product orientation - is an inward looking approach where a business primarily focuses on creating and developing a high-quality
product or service.
Market orientation - where a business chooses to design a product or service to meet the requirements of customer preferences.
Consumer panels - groups of customers are asked for feedback about products over a period of time
Database - an organised collection of data stored electronically with instant access, searching and sorting facilities
Focus groups - a number of customers are invited to attend a discussion about a product led by market researchers
Market segment - part of a whole market where a particular customer group has similar characteristics
Primary research - gathering of ‘new’ information firsthand
Secondary research - collection of data that is already in existence
Qualitative research - collection of data about attitudes, beliefs, intentions
Quantitative research - collection of data that can be quantified
Respondent - a person or organisation that answers questions in a survey
Socioeconomic groups - division of people according to social class
Primary market research
How primary research is undertaken...
Observation - businesses watch customers to see how they behave when purchasing specific products or services
Online surveys - ICT method of asking customers questions about a product or service through a range of websites, however they
have low response rates and therefore can give a distorted picture of consumer opinion
Face to face surveys - personal interviews conducted face to face to obtain customer views on products or services, costly but a
productive way to get detailed insights from an individual
Focus groups - groups of potential customers brought together to discuss their feelings regarding a product or service, great way
of getting detailed and qualitative information about customers tastes and preferences
Secondary market research
How can secondary research be obtained…
Government statistics - available to all businesses such as demographic trends, free to obtain and free from bias but can be out
of date
Commercial organisations - often publish market research reports on hundreds of customer products and services, specifically
about a certain market, shows potential areas for new businesses to take on the market, not specific
Business’ own data - such as sale figures and number of customers visiting the business, already acquired, cheap, confidential,
may not answer key questions
Competitor's data - publicly available sales and profit figures can be used to research how competitors are performing in the
market, cheap to obtain, available information is basic
TYPE OF MARKET RESEARCH PROS CONS
PRIMARY - involves new data being up-to-date time-consuming
gathered first hand questions can be tailored to the costly
individual needs of a business biassed
best for qualitative data difficult to collect large samples of data
SECONDARY - involves using data cost effective dependent on someone else’s efforts
collected by someone else that have not time effective as data already exists biassed
been designed specifically for the best for quantitative data
business
How does a market orientation approach change a company?
- must undertake continuous market research
- design a customer focused product
- produce a product in sufficient numbers but not so as to flood a market
- consider buying and delivering habits of the consumer
- understand how much the consumer is willing to pay for the product
, TYPE OF ORIENTATION PROS CONS
PRODUCT - focused on production focus on product quality and innovation ignores customer priorities
efficiencies and the product itself customers more likely to buy high-quality expensive to develop boujee products
products
MARKET - focused on customer needs close fit to customer preferences, consistent changes may leave
priorities and tastes customers confused
greater responsiveness to changes in constant changes may mean people are
customer needs more reluctant to buy and would rather
wait for the next edition
Market segmentation
Involves dividing a market into smaller sets of customers, or segments, who have similar needs and interests. For example, a bank
might segment its potential customers into those aged 18-24 in order to look at the needs and wants of those customers in terms of
bank accounts.
PROS
- business can focus on how best to meet customer needs
- increase sales as products or services are tailored
- businesses can avoid wasting promotional resources by not targeting products at customers that don’t want them
CONS
- expensive to produce number of products for a variety of people
Qualitative research - generally collects information about opinions and views rather than things that can be quantified e.g.
research into whether customers think the customer service at Waitrose is good is qualitative research
Quantitative research - collects factual information on things that can be quantified and recorded easily e.g. research into the
number of cans of Coca Cola sold in the UK last year is quantitative research
Sampling
Sampling reduces cost as a business can choose a cross-section of the population instead of collecting data from everybody
- it is quicker and easier than trying to collect research from everyone
- however sampling may not accurately reflect the full target market is the sample is not chosen appropriately
Market segmentation
Is the process of dividing potential customers into different groups based on characteristics like age, gender, income and much
more
Why do businesses use market segmentation?
Choosing market mix - understand its customers’ needs and wants e.g. Next provides clothing aimed at infants and toddlers using
its Next Kids range
Choosing promotion - advertising in a newspaper probably isn’t the best way to target teenage girls, but a teenage magazine like
Bliss might be
Methods of market segmentation - age, income, gender, location
ICT and market research
ICT can support the collection and analysis of market research data in a number of ways
- collecting data through websites
- social media networking
- analysing information in databases
Geographic, demographic and psychographic segmentation
Geographic - different customer groups are likely to have different needs depending on where they live
Demographic - common for businesses to divide markers according to age, gender, income, social class, ethnicity or religion (e.g.
Kosher market in US worth $100 billion)
Psychographic - grouping customers according to their attitudes, opinions and lifestyles
- sports products may be aimed at those who are interested in extreme sports
- chocolate manufacturers for depressive or energetic eaters
- clothes geared to those interested in retro
- newspapers geared towards labour or conservatives
Behavioural segmentation
- usage rate (consumers categorised according to quantity and frequency of purchases
- loyalty (consumers categorised according to brand loyalty)
- time and date of consumption (can improve business marketing towards specific consumers)
Databases
A database is really an electronic filing system. A good database will have the following facilities…
- user-definable record format, allowing the user to enter any chosen field on the record
