UNIT 1: MARKETING AND PEOPLE
1. THE MARKET (market – set of arrangements that allow buyers and sellers
to communicate and trade in goods and services )
Marketing
Marketing - Identifying customer needs and satisfying them profitably
The importance of marketing
Identifying the needs and wants of consumers - Marketing involves
identifying the needs and wants of consumers, which leads to the
development of products and services that satisfy them, which leads to
higher customer satisfaction and loyalty, which leads to increased sales and
business growth.
Telling customers about products - Marketing involves telling customers
about products, which leads to increased awareness and interest, which
leads to more potential customers trying the product, which leads to higher
sales and market share.
Charging the right price - Marketing involves charging the right prices on
products, which leads to customers feeling they get good value, which leads
to more people buying, which leads to higher profits.
The characteristics of mass markets and niche markets
Mass market - When a business sells the same products to all consumers and
markets them in the same way. (e.g. drinks, mobile devices)
ADVANTAGES DISADVANTAGES
The business can produce large Higher levels of competition mean
quantities at lower costs by exploiting businesses must constantly innovate
economies of scale. This allows the and differentiate themselves to stand
business to reduce per-unit cost of out. This intense competition often
production. This allows the business results in price wars, where
to achieve higher profits. companies lower their prices to
attract more customer. This can
benefit customers; however, it can
squeeze profit margins for businesses,
making it difficult to maintain.
The business can appeal to a large Products are less unique as they are
audience, which allows it to build a aimed at broad market segments. This
strong brand presence. As the means that for the business it will be
business constantly satisfies the more difficult to focus on each
customer’s needs and wants, it can consumer's need and want, possibly
, establish a brand that customer trust. resulting in loss of customer
This creates loyalty, meaning more satisfaction and therefore lower profit
customers are likely to return to the margins.
brand for other purchases.
Niche market - A small market segment (e.g. medical equipment, specialist food)
where consumers have specific needs and wants.
ADVANTAGES DISADVANTAGES
Easier for the business to focus on the Cannot exploit economies of scale.
needs of customers. This enables the Without the ability to lower
company to offer highly customized production costs, the business may
products or services that meet the have higher per-unit costs compared
needs of its target audience. As a to competitors. This can lead to
result, the business is likely to build higher prices for customers, reducing
stronger customer loyalty. competitiveness against companies
that benefit from economies of scale
There is less competition. This allows A niche market focuses on a small
the company to set its prices with group of people, which limits the
greater flexibility. This will result in number of potential customers. This
higher profit margins for the business. smaller audience can make it harder
to grow the business and reach high
sales numbers and make it difficult for
a business to expand its market reach.
FROM A NICHE TO A MASS MARKET:
- Change in promotional costs –> from below-the-line to above-the-line
- Face more competition –> reduce prices to compete
- Volume sold will be much higher –> lower unit costs
- Changes in the distribution network –> extend distribution globally (more
wholesalers and retailers)
FORMULA:
Market Size = Number of Units Sold ×
Selling Price per Unit
Market size
Market size is estimated on value and volume
Value - The total amount spent by customers buying products.
Volume - The physical quantity of products that are produced and sold.
The importance of market size
Market size is important for a business as a larger market means more
potential customers, which can lead to higher sales and revenue
opportunities, which leads to greater profitability.
2
, Market size is important for a business as in larger markets, businesses can
produce goods or services in higher volumes, reducing per-unit costs and
increasing profitability, which leads to the ability to offer competitive pricing,
which leads to attracting more customers and gaining market share.
Market size is important for a business as operating in a large market can
help a business build stronger brand recognition and influence, reaching a
wider audience, which leads to increased customer trust and loyalty, which
leads to higher sales and long-term business growth.
FORMULA:
Market share = (Sales of a business/total sales in the market) x 100
Market share
Market share - Is the proportion of a particular market that is held by a business, a
product, a brand or a number of businesses or products.
Why might the measurement of market share be important?
The measurement of market share is important as it might indicate a
business that is a market leader, this leads to a stronger competitive position
in the market, which leads to greater opportunities for expansion and
innovation.
The measurement of market share is important as increasing market share
typically reflects successful marketing, sales strategies, and product
acceptance, giving businesses confidence that they are meeting customer
needs, which leads to stronger brand loyalty and customer retention, which
leads to sustained revenue growth and long-term business stability.
Brands
Brand – Is a name, image, or logo which helps one product/service stand out from its
competitors
What might branding be used to?
Differentiate the product from those of rivals - Branding might be used to
differentiate the product from those of rivals, which leads to increased brand
recognition and customer loyalty, which leads to a stronger market position.
Develop an image - Branding might be used to develop an image, which leads
to increased brand loyalty and preference, which leads to higher customer
retention and stronger market competitiveness.
Charge a premium price when the brand becomes strong - Branding might
be used to charge a premium price when the brand becomes strong, which
leads to higher profit margins, which leads to increased revenue and financial
stability, which leads to more resources for investment in business growth.
3
, Businesses operating in mass markets use branding to stand out from competitors.
Businesses operating in niche markets use branding to communicate their
offering to a small group of consumers.
Emotional branding – the process of forming a relationship between a consumer
and a product or brand by provoking their emotions.
- Customers may feel an attachment to the business -> brand loyalty ->
increased sales
- Helps differentiate a product -> provide a competitive advantage
- May have little or no impact on the consumer purchasing decision
- May not differentiate a business if competitors are making similar products
Dynamic markets
Dynamic markets - A market that is subject to rapid or continuous changes.
a. ONLINE RETAILING
Online retailing involves selling products via the internet
ADVANTAGES DISADVANTAGES
It provides businesses access to more There may be high costs for website
consumers, including internationally, development, maintenance, and
which leads to increased sales promotion, which leads to increased
opportunities and revenue growth, initial and ongoing expenses, which
which leads to greater market reach leads to the need for careful budget
and business expansion. management.
It enables longer trading hours as the There is a lack of personal contact
business is open 24/7. It attracts with customers, which leads to
customers who live in different time reduced opportunities for building
zones or with busy schedules, which personal relationships and trust,
leads to higher sales volume and which leads to potential challenges in
revenue. understanding and addressing
individual customer needs, which
leads to a need for engagement
strategies to compensate for the lack
of face-to-face interaction.
It reduces overhead costs, leading to Some customers prefer physical
cost savings. This allows to charge stores. This is because it provides
lower prices and therefore increase them with the opportunity to
sales opportunities from price- physically see the products.
sensitive customers.
Online businesses align with changing If connectivity is poor, it will make it
social trends. An increasingly amount harder for customers to access the
of people like the convenience online business. This will impact
offered by online businesses, leading customer’s shopping experience
to customer satisfaction.
4
1. THE MARKET (market – set of arrangements that allow buyers and sellers
to communicate and trade in goods and services )
Marketing
Marketing - Identifying customer needs and satisfying them profitably
The importance of marketing
Identifying the needs and wants of consumers - Marketing involves
identifying the needs and wants of consumers, which leads to the
development of products and services that satisfy them, which leads to
higher customer satisfaction and loyalty, which leads to increased sales and
business growth.
Telling customers about products - Marketing involves telling customers
about products, which leads to increased awareness and interest, which
leads to more potential customers trying the product, which leads to higher
sales and market share.
Charging the right price - Marketing involves charging the right prices on
products, which leads to customers feeling they get good value, which leads
to more people buying, which leads to higher profits.
The characteristics of mass markets and niche markets
Mass market - When a business sells the same products to all consumers and
markets them in the same way. (e.g. drinks, mobile devices)
ADVANTAGES DISADVANTAGES
The business can produce large Higher levels of competition mean
quantities at lower costs by exploiting businesses must constantly innovate
economies of scale. This allows the and differentiate themselves to stand
business to reduce per-unit cost of out. This intense competition often
production. This allows the business results in price wars, where
to achieve higher profits. companies lower their prices to
attract more customer. This can
benefit customers; however, it can
squeeze profit margins for businesses,
making it difficult to maintain.
The business can appeal to a large Products are less unique as they are
audience, which allows it to build a aimed at broad market segments. This
strong brand presence. As the means that for the business it will be
business constantly satisfies the more difficult to focus on each
customer’s needs and wants, it can consumer's need and want, possibly
, establish a brand that customer trust. resulting in loss of customer
This creates loyalty, meaning more satisfaction and therefore lower profit
customers are likely to return to the margins.
brand for other purchases.
Niche market - A small market segment (e.g. medical equipment, specialist food)
where consumers have specific needs and wants.
ADVANTAGES DISADVANTAGES
Easier for the business to focus on the Cannot exploit economies of scale.
needs of customers. This enables the Without the ability to lower
company to offer highly customized production costs, the business may
products or services that meet the have higher per-unit costs compared
needs of its target audience. As a to competitors. This can lead to
result, the business is likely to build higher prices for customers, reducing
stronger customer loyalty. competitiveness against companies
that benefit from economies of scale
There is less competition. This allows A niche market focuses on a small
the company to set its prices with group of people, which limits the
greater flexibility. This will result in number of potential customers. This
higher profit margins for the business. smaller audience can make it harder
to grow the business and reach high
sales numbers and make it difficult for
a business to expand its market reach.
FROM A NICHE TO A MASS MARKET:
- Change in promotional costs –> from below-the-line to above-the-line
- Face more competition –> reduce prices to compete
- Volume sold will be much higher –> lower unit costs
- Changes in the distribution network –> extend distribution globally (more
wholesalers and retailers)
FORMULA:
Market Size = Number of Units Sold ×
Selling Price per Unit
Market size
Market size is estimated on value and volume
Value - The total amount spent by customers buying products.
Volume - The physical quantity of products that are produced and sold.
The importance of market size
Market size is important for a business as a larger market means more
potential customers, which can lead to higher sales and revenue
opportunities, which leads to greater profitability.
2
, Market size is important for a business as in larger markets, businesses can
produce goods or services in higher volumes, reducing per-unit costs and
increasing profitability, which leads to the ability to offer competitive pricing,
which leads to attracting more customers and gaining market share.
Market size is important for a business as operating in a large market can
help a business build stronger brand recognition and influence, reaching a
wider audience, which leads to increased customer trust and loyalty, which
leads to higher sales and long-term business growth.
FORMULA:
Market share = (Sales of a business/total sales in the market) x 100
Market share
Market share - Is the proportion of a particular market that is held by a business, a
product, a brand or a number of businesses or products.
Why might the measurement of market share be important?
The measurement of market share is important as it might indicate a
business that is a market leader, this leads to a stronger competitive position
in the market, which leads to greater opportunities for expansion and
innovation.
The measurement of market share is important as increasing market share
typically reflects successful marketing, sales strategies, and product
acceptance, giving businesses confidence that they are meeting customer
needs, which leads to stronger brand loyalty and customer retention, which
leads to sustained revenue growth and long-term business stability.
Brands
Brand – Is a name, image, or logo which helps one product/service stand out from its
competitors
What might branding be used to?
Differentiate the product from those of rivals - Branding might be used to
differentiate the product from those of rivals, which leads to increased brand
recognition and customer loyalty, which leads to a stronger market position.
Develop an image - Branding might be used to develop an image, which leads
to increased brand loyalty and preference, which leads to higher customer
retention and stronger market competitiveness.
Charge a premium price when the brand becomes strong - Branding might
be used to charge a premium price when the brand becomes strong, which
leads to higher profit margins, which leads to increased revenue and financial
stability, which leads to more resources for investment in business growth.
3
, Businesses operating in mass markets use branding to stand out from competitors.
Businesses operating in niche markets use branding to communicate their
offering to a small group of consumers.
Emotional branding – the process of forming a relationship between a consumer
and a product or brand by provoking their emotions.
- Customers may feel an attachment to the business -> brand loyalty ->
increased sales
- Helps differentiate a product -> provide a competitive advantage
- May have little or no impact on the consumer purchasing decision
- May not differentiate a business if competitors are making similar products
Dynamic markets
Dynamic markets - A market that is subject to rapid or continuous changes.
a. ONLINE RETAILING
Online retailing involves selling products via the internet
ADVANTAGES DISADVANTAGES
It provides businesses access to more There may be high costs for website
consumers, including internationally, development, maintenance, and
which leads to increased sales promotion, which leads to increased
opportunities and revenue growth, initial and ongoing expenses, which
which leads to greater market reach leads to the need for careful budget
and business expansion. management.
It enables longer trading hours as the There is a lack of personal contact
business is open 24/7. It attracts with customers, which leads to
customers who live in different time reduced opportunities for building
zones or with busy schedules, which personal relationships and trust,
leads to higher sales volume and which leads to potential challenges in
revenue. understanding and addressing
individual customer needs, which
leads to a need for engagement
strategies to compensate for the lack
of face-to-face interaction.
It reduces overhead costs, leading to Some customers prefer physical
cost savings. This allows to charge stores. This is because it provides
lower prices and therefore increase them with the opportunity to
sales opportunities from price- physically see the products.
sensitive customers.
Online businesses align with changing If connectivity is poor, it will make it
social trends. An increasingly amount harder for customers to access the
of people like the convenience online business. This will impact
offered by online businesses, leading customer’s shopping experience
to customer satisfaction.
4
