Marketing & The Competitive Enviornment

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the anticipating and satisfying of customers wants in a way that delights the customer and also meets the needs of the organisation

Product - Price - Place - Promotion

Types of marketing objectives

  • size - measured by sales and market
  • market positioning
  • innovation/increase in product range
  • creation of brand loyalty
  • security/survival
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Business-to-business marketing (B2B) - where a firm sells it product to another business

Main features of B2B marketing

  • larger transactions
  • specialist buyers and seller
  • quality
  • informative advertising
  • pricing
  • buyers and sellers relationship

Business-to-consumer marketing (B2C) - where a firm targets individual consumers with its products

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Niche Marketing

targeting a product or service at a small segment of a large market


  • less competition
  • costs
  • small scale production
  • tailor made products (USP)
  • targeting customers


  • lower profits 
  • changes in demand
  • market entry
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Mass Marketing

aiming a product at all (or most) of the market


  • larger scale production
  • high revenues
  • barriers to entry
  • research and development
  • brand awareness


  • fixed capital
  • changes in demand
  • effects of standardisation
  • competition
  • adding value
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Product Differentiation

the degree to which consumers see a particular brand as being different from other brands


  • increased sales volume
  • greater scope for changing a higher price
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Marketing Mix

those elements of a business's approach to marketing that enable it to satisfy and delight its customers


  • Finance - cash flow, discounts, the marketing budget and cost of promotion
  • Technology - advanced products, lower costs, online selling
  • Market Research - level of competition, availability of substitutes, consumers opinions, niche or mass marketing, the market segment
  • Other Factors - power of buyers and sellers, quality of the promotion, elasticity of demand, reputation of business, convenience of the location
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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

  • Reliability
  • Safety
  • Convenience of use
  • Fashion
  • Durability
  • Legal Requirements

Product Development - when a firm creates a new or improved good or service for release into an existing market

1.Generation of idea - 2. Analysis of idea - 3. Product development - 4. Test marketing - 5. Launch

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Influence on the development of new goods or services

  • Technology
  • Competitors actions
  • Entrepreneurial skills of managers and owners
  • Other factors - Market research, Idea's from other countries, Personal experiences, Personal need and inventiveness, Environmental awareness

Unique Selling Point (USP) - a feature of a product or service that allows it to be differentiated from other products

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Product Portoflio

the range of products or brands provided by a business

Product Portfolio Analysis - the study of the range of products with a view to deciding whether new products should be added to the portfolio and whether any existing products should no longer be provided

Boston Matrix - a tool of product portfolio analysis that classifies products according to the market share of the product and the rate of growth of the market in which the product is sold

Stars - high market share, high market growth

Cash Cows - low market growth, high market share

Problem Child - high market growth, low market share

Dogs - low market growth, low market share

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Product Life Cycle

the stages that a product passes through during its lifetime - development, introduction, growth, maturity and decline

Extension strategies - methods used to lengthen the life cycle of a product by preventing or delaying it from reaching the decline stage of the product life cycle

Types of extension strategies

  • attracting new market segments
  • increasing usage among existing customers
  • modifying the product
  • change the image
  • targeting new markets
  • promotions, advertising and price offers
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the process of communicating with customers or potential customers

AIDA - Attention, Interest, Desire, Action

Promotional Mix - the coordination of the various methods of promotional mix in order to achieve overall marketing targets

Public Relations (PR) - gaining favourable publicity through the media

Branding - the process of differentiating a product or service from its competitors through the name, sign, symbol, design or slogan linked to the product or service

Merchandising - attempts to persuade consumers to take action at the 'point of sale' or 'point of purchase'

Sales Promotion - short term incentives used to persuade consumers to buy a particular product

Direct Selling - communicating directly to the individual consumers through an appropriate form of communication e.g. postal system or telephone etc

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Promotional Mix

Advertising - communicating with customers or potential customers through specific media

Sponsorship - giving financial assistance to an individual, event or organisation

Influences on the choice of promotional mix

  • objectives of the campaign
  • costs and budgets
  • the target market
  • the balance of promotions in a campaign
  • legal factors
  • external factors
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Pricing strategies - approaches adopted in order to achieve marketing objectives

Price Skimming - a strategy in which a high price is set to yield a high profit margin

Penetration Pricing - a strategy in which low prices are set to break into a market or to achieve a sudden sprint in market share

Price Leadership - a strategy in which a large company (price leader) sets a market price that smaller firms will tend to follow

Price Taking - a strategy in which small firms follows the price set by a price leader

Predator Pricing - a strategy in which a firm sets very low prices in order to drive other firms out of the market

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Pricing Tactics

pricing approach or techniques used in the short term to achieve specific objectives

Loss Leadership - a tactic in which a firm sets a low price for its products in order to encourage consumers to buy other products that provide profit for the firm

Psychological Pricing - a tactic intended to give the impression of value e.g. selling a good for £9.99 rather than £10

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Influences on the pricing decisions

  • the cost of production - a business should ensure that they make profit, the price of the product should be high enough to cover costs
  • Mark-up - is the percentage added onto the average costs
  • Price elasticity of demand - the responsiveness of a change in the quantity demanded of a good or service to change in price

% change in quantity demanded / % change in price X 100

Elastic Demand - percentage change in price leads to a greater percentage change in quantity demanded

Inelastic Demand - percentage change in price leads to a smaller percentage change in quantity demanded - price raises, quantity demand falls

Unit Elasticity - change in price / original price X 100

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Price Elasticity of Demand

Factors influencing the price elasticity of demand

  • necessity
  • habit
  • availability of substitutes
  • brand loyalty
  • proportion of income spent on a product
  • income of consumers

Difficulties in calculating elasticity of demand

  • competitors reactions
  • consumers reactions
  • market research
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Importance of location

  • convenience
  • accessibility
  • costs of access
  • reputation
  • localisation

Measures to increase the number of outlets stocking their products

  • promotional campaigns
  • providing extra facilities or attractive displays
  • offering high profit margins to retailers
  • paying generous commission to sales staff
  • increasing brand loyalty
  • investigating alternative outlets
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Distribution Channels - channels or routes through which a product passes in moving from the manufacturer to the consumer

Distributors - businesses involved in the process of making a product available to the end customers or consumers

Retailers - businesses who buy form wholesalers or direct from producers for sale to the public in shops or retail outlets

Wholesalers -  businesses who buy large quantities of goods from producers for a resale in smaller quantities to retailers

Traditional - producer - wholesalers - retailers - consumers

Modern - producer - retailer - consumer

Direct - producer - consumer

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Factors influencing the method of distribution

  • the size of the retailer
  • the type of product
  • technology
  • the geography of the market
  • the degree of control desired by the manufacturer
  • the complexity of the product
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Marketing & Competitiveness

Competitiveness - the ability of businesses to sell their products successfully in the market in which they are based

Monopoly - in theory, a single producer in a market but in practice a firm with a market share of 25% or more, has control over prices and supply

Oligopoly - a market dominated by a small number of large businesses, they sell similar products that have some control over price

  • Cartel - a group of firms that come together to agree price and output levels in an industry

Monopolistic Competition - where a large number of firms are competing in a market, each having enough product differentiation to achieve a degree of monopoly power and therefore some control over the price they charge

Perfect Competition - where many firms sell an identical product that have no control over price

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Marketing & Competitiveness

Factors determining competitiveness

  • the effectiveness of the marketing mix
  • incentive schemes for staff
  • improvements to operational procedures
  • quality procedures
  • financial planning and control

Methods of improving competitiveness

  • marketing
  • reducing costs
  • improving quality
  • staff training
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Porters's 5 Forces Model

This model is used to understand the factors effecting the industry within which firm operates

  • bargaining power of suppliers
  • bargaining power of buyers (customers)
  • threat of substitutes (rival products/services)
  • threat of new entrants (barriers to entry)
  • degree of rivalry (intensity of competition)
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