tutor2u ™ gcse business studies revision presentations 2004 what is marketing?

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GCSE Business GCSE Business StudiesStudiesRevision Presentations 2004Revision Presentations 2004

What is Marketing?


GCSE Business GCSE Business StudiesStudies

Marketing is About…

Understanding the needs of customers

Meeting the needs of customers

Delighting customers so they…

Buy from you again

Recommend you to their friends and family

Become loyal to your products and brands

Marketing is all About Customers



Formal Definition of Marketing

“The process of identifying, anticipating (predicting) and satisfying customer needs profitably”

That’s a bit of a mouthful. What does it mean?

Identifying – finding out by using marketing research about current products, the possibility of new products, and current markets and new markets

Anticipating (predicting) – analysing the data collected to judge what might happen in these markets and how the products might be suited or changed, adapted or updated

Satisfying customer needs – making sure the person, business or government are happy with what they are buying, will not complain and will be happy to buy again

Profitably – adding value to the product so when sold, the price of a product is greater than cost of making it



Four Main Kinds of Market

Industrial markets

The market for manufactured products aimed at businesses, i.e. capital goods e.g. engineering, construction

Consumer markets

The market for goods and services that are sold to households e.g. clothing, shampoo, holidays (see next slide for ways in which consumer markets can be categorised in more detail)

Commodity markets

The market for primary products or raw materials e.g. steel, coal, coffee

Financial markets

The market for services that dealing with money e.g. banking, insurance, accounting



Consumer Markets

Most of the markets you will study are consumer markets. They can be sub-divided into even more categories!

Fast-moving consumer goods (“FMCGs”)

These are high volume, low unit value, fast repurchase

Examples include: Ready meals; Baked Beans; Newspapers

Consumer durables

These have low volume but high unit value. Consumer durables are often further divided into “white goods” (e.g. fridge-freezers; cookers; dishwashers; microwaves) and “brown/black goods” (e.g. DVD players; games consoles; personal computers)

Soft goods

Soft goods are similar to consumer durables, except that they wear out more quickly and therefore have a shorter replacement cycle. Examples include clothes, shoes

Services

E.g. hairdressing, dentists, childcare



Marketing Orientation

Businesses can develop new products based on either a marketing orientated approach or a product orientated approach.

A marketing orientated approach means a business reacts to what customers want. Most successful businesses take a market-orientated approach.

A product orientated approach means the business develops products based on what it is good at making or doing, rather than what a customer wants

Most markets are moving towards a more market-orientated approach because customers have become more knowledgeable and require more variety and better quality

To compete, businesses need to be more sensitive to their customers needs otherwise they will lose sales to their rivals.



Measuring the Market

Not all markets are the same Some are very large, some small Some markets are focused on a particular location; others operate

around the world

We need a measure of a market – most often we talk about “market size”

Market size means the number of customers in the market (either current or potential buyers) and the amount (value or volume) that they buy.

One business rarely sells to all the customers in the market. They will have a share of the market with the rest shared out amongst one or more competitors. Market share by value: using sales in a specific period (usually one

year) Market share by volume: using units sold or bought as a measure of

size

Market share is an important idea. There is lots of evidence to show that businesses that enjoy a large share of a market achieve higher profits than smaller competitors.



Role of Marketing in a Business

Marketing is perhaps the most important activity in a business because it has a direct effect on profitability and sales. Larger businesses will dedicate specific staff and departments for the purpose of marketing.

It is important to realise that marketing cannot be carried in isolation from the rest of the business. For example: The marketing section of a business needs to work closely with

operations, research and development, finance and human resources to check their plans are possible.

Operations will need to use sales forecasts produced by the marketing department to plan their production schedules.

Sales forecasts will also be an important part of the budgets produced by the finance department, as well as the deployment of labour for the human resources department.

A research and development department will need to work very closely with the marketing department to understand the needs of the customers and to test outputs of the R&D section.

tutor2u ™ gcse business studies revision presentations 2004 what is marketing?

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