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Marketing and the competitive enviroment

The purpose of marketing:

Anticipating customers wants - You may to this by conducting market research

Satisfying customers- An organisation will decide suitable marketing techniques in order to ensure that customers are happy. The approach they will use is the marketing mix (4 Ps)

Meeting the needs of the organisation- This is to satisfy a businesses own wants. A business will have corporate aims and objectives.

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Types of marketing objective


This can be measured by sales or market share

Market positioning-

This is concerned with a company's appeal to a particular market segments


Bring out a new product on to the market

Creation of brand loyalty


Maintaing a presence in the market

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Different markets 1

The term 'niche marketing' means targeting a product or service at a small market segment of a larger market

The term 'mass marketing' means aiming a product at all of the market

Advantages of niche marketing-

Less competition


Small-scale production

Tailor-made products

Targeting customers

Disadvantages of niche marketing

Lower profits

Changes in demand

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Different markets 2

Market entry

Advantages of mass marketing

Large-scale production

High revenues

Barriers to entry

Research and development

Brand awareness

Disadvantages of mass marketing

Fixed capital

Changes in demand

Effects of standardisation


Adding value

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Designing an effective marketing mix 1

A business's decision is functional area will be influenced by its financial position. As marketing involves significant expenditure before any results are achieved, and will always include an element of risk, the finances of a firm are critical

Cash flow


The marketing budget and the cost of promotions

Technology affects the marketing mix in several ways

Technologicallt advanced product

Sophistication of the organisation's database

Lower costs

Online selling

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Designing an effective marketing mix 2

Market research provide information to a business, which helps it to adapt its marketing mix in order to gain advantage

Level of competition

Availability of substitutes

Consumer opinions

Niche or mass marketing

The market segment

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The four P's





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Product 1

The main elements of a succesful product are the features and design of the product and new product development

Key terms

Product- The good or service provided by a business

Product design- Deciding on the make up of a product so that it works well, looks good and can be produced economically

Product development- When a firm creates a new or improved good or service, for release into an existing market

Unique selling point (USP)- A feature or function of a product that makes it different to any on the market

Product differentiation- creatinga percieved difference for a product in a competitive market

Product portfolio- Analysing the existing product mix to help develop a balanced range of goods and services

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Product 2

Boston Matrix

This is a model which analyses the goods or services offered by a business in terms of their share of the market, and wheather the market itself is growing. From this decisions can be made about how each product should be treated in the future.

The problem child/ question mark- A new product with a small share of a growing market high maintenance, needing high levels of investment to become well established in the market. High failure rate but potential for future success.

The Rising Star- High share of a growing market , high maintenance, marketing resources and effort should be concentrated on this type of productso market share is maintained, fierce competeion is likely.

The Cash Cow- High share in a low growth market, any increase in sales will be at the expense of a competitor, low maintenance, little marketing expenditure neededm relatively high profits

The Dog- Low share of a decling market, may be kept going because they compete a product line, can possibly be revived.

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Product life cycle

The product life cycle is the path of a product from its introduction onto the market, to its eventful dissappearance from that market.

The stages of the life cycle:

Development stage- the product is being researched and prepared for introduction to the market. No sales are made during this phase.

The introduction stage- when the product is being launched onto the market

The growth stage- When sales start to increase and the product should achieve break-even

The maturity stage- occurs when sales level off and revenue generated by the product stablises

Decline- Starts when sales begin to fall

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Promotion is the element of the marketing mix concerned with ensuring that customers and potential customers are aware of current and new products in a firm's range.

Key terms-

Sales promotion- Offers designed to increase sales

Promotional activities- The ways in which a business can communicate with its potential and existing customers with the aim of increasing sales.

Direct selling- A way of selling directly to the final consumer without intermediary

Merchandising- The visual presentation of a product to the consumer at the point of sale

Advertising- The use of media to communicate with consumers

Public relations- Communication with the media and other interested parties to enhance the image of the business and its products, and thereby increase sales

Branding- Creating and identity for a business and its products to differentiate it from rivals in the market

Promotional mix- The combination of promotional activities which make up a campaign to communicate with a target market

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Pricing strategies 1

When a new product is launced onto the market, the firm must decide how much to charge. If the proce is too high or too low for the market, it can at best limit the growth of the business and at worse cause sales and cash flow problems.

Key terms-

Pricing skimming- Entering a market with a high price to attract early adopters and recoup high development costs

Penetration pricing- Below market pricing to gain a foothold in an established and competitive market

Price leader- A product that has significant market share and can influence the market price

Price taker- A firm which sets its prices at the same or similar level to those of the dominant firm in the industry

Pricing tactics- The manipulation of price to achieve a specific short-term objective

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Pricing strategies 2

Loss leaders- Products sold at less than cost to attract customers to a product range

Psychological pricing- The use of odd number pricing to increase the value-for-money appeal of a product

Price elasticity of demand- The responsiveness of demand for a product to change in its price


Change in demand (%) / change in price (%)

Key term-

Price elastic demand- The demand for a product changes relatively more than the change in price

Price inelastic demand- The demand for a product changes relatively less than the change in price

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Place is the distribution of the product to the purchaser, wheather it is another business or the final customer. The aim is that the product gets to the right places at the right time.

Distribution channels- Method by which a product is sold to the customer.

Direct sale- Where no intermediaries are used

Intermediaries- organisations involved in the distribution of goods and services on behalf of other businesses

Business to business markets- Companies meeting the needs of other businesses in the market place.

Business to consumer markets- Companies meeting the needs of final consumers of goods and services

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