Download Definition of marketing

What is Marketing?
GCSE Business Studies
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Revision Presentations 2004
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
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GCSE Business Studies
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
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GCSE Business Studies
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
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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
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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 marketorientated 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.
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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.
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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.
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