Marketing
Subject: Business Studies
Topic: 3
Cambridge Code: 0264 / 0450 / 7115
Marketing Definition
Marketing - Identifying customer needs and satisfying them profitably
Marketing Concept
- Identify needs - Market research
- Develop products - To meet needs
- Promote effectively - Communicate benefits
- Distribute - Make accessible
- Profit - Achieve business goals
Market Research
Market research - Investigation of customer needs and market conditions
Primary Research
Qualitative data:
- Focus groups - Group discussions
- Interviews - One-on-one questions
- Observations - Watching customer behavior
Quantitative data:
- Surveys - Questionnaires with large numbers
- Experiments - Testing response to changes
- Statistics - Sales data, trends
Secondary Research
- Industry reports
- Competitor analysis
- Government statistics
- Published data
Advantages/Disadvantages
| Type | Advantage | Disadvantage |
|---|---|---|
| Primary | Specific to business | Time-consuming, expensive |
| Secondary | Quick, cheap | May be outdated |
Market Segmentation
Market segmentation - Dividing market by customer types
Segmentation Bases
Demographics:
- Age, gender, income
- Family status, education
Psychographics:
- Lifestyle, values, interests
- Personality traits
Geographic:
- Location, climate, population density
- Urban vs rural
Behavioral:
- Usage rate, brand loyalty
- Price sensitivity
Targeting Strategies
Mass Marketing: All segments equally
- High volume, low profit margin
- Example: Basic products
Differentiated: Different products per segment
- Higher profit, costly
- Example: Car manufacturers
Niche: Single segment focus
- Specialized offerings
- Example: Luxury goods
Product Lifecycle
Product lifecycle - Stages from launch to withdrawal
Stages
1. Development
- R&D investment
- No sales
- High cost
2. Introduction
- Low sales (building awareness)
- High promotional cost
- Price: High (skimming) or low (penetration)
3. Growth
- Sales increasing rapidly
- Profit rising
- Competition enters
- Reduce price to gain share
4. Maturity
- Peak sales
- Maximum profit (if efficient)
- Intense competition
- Promotional intensity high
5. Decline
- Sales falling
- Profit declining
- Customers switch brands
- Reduce costs or withdraw
Extension Strategies
Lengthen maturity phase:
- Repackaging
- New uses
- Market expansion
- Price reduction
Marketing Mix (4 Ps)
Product
What to offer:
- Features and benefits
- Quality, design, durability
- Brand, packaging, warranty
- Service and support
Price
How much to charge:
- Cost-based pricing
- Competition-based pricing
- Value-based pricing
- Psychological pricing (10)
Place (Distribution)
Where to sell:
- Retail stores
- Direct (online, mail)
- Wholesalers
- Franchising
Promotion
How to communicate:
- Advertising (TV, print, web)
- Sales promotion (discounts, offers)
- Personal selling
- Public relations
Promotional Methods
Advertising
Mass communication, paid:
- TV, radio, print, billboards
- Online (Google, Facebook)
- Cost-effective for large audience
- Cannot interact with customers
Sales Promotion
Short-term incentives:
- Discounts, buy-one-get-one
- Loyalty programs
- Samples, trial offers
- Boosts immediate sales
Personal Selling
Direct interaction:
- Sales representatives
- Relationship building
- Persuasion possible
- Expensive per customer
Public Relations
Building image:
- Press releases
- Sponsorships
- Community involvement
- Builds credibility
Brand and Branding
Brand - Name, symbol, design identifying product
Brand Value
- Recognition - Customer awareness
- Loyalty - Repeat purchase
- Premium Price - Can charge more
- Differentiation - Stand out from competitors
Brand Building
- Consistent quality
- Effective promotion
- Customer experience
- Storytelling
- Celebrity endorsement
Elasticity of Demand
Price elasticity - How demand responds to price change
Elastic Demand (PED > 1)
- Large quantity change for small price change
- Examples: Luxury goods, alternatives exist
- Price decrease: Total revenue increases
Inelastic Demand (PED < 1)
- Small quantity change for large price change
- Examples: Essential goods, no alternatives
- Price increase: Total revenue increases
Unit Elastic (PED = 1)
- Proportional changes
- Revenue stays same
Key Points
- Marketing identifies and satisfies customer needs
- Market research: primary and secondary
- Segmentation targets specific groups
- Product lifecycle: Development → Decline
- Marketing mix: Product, Price, Place, Promotion
- Promotion types: Advertising, sales, personal, PR
- Brands build customer loyalty
Practice Questions
- Design market research plan
- Segment market for product
- Position product on lifecycle
- Develop marketing mix strategy
- Calculate price elasticity
- Evaluate promotion methods
Revision Tips
- Know marketing concept
- Learn lifecycle stages
- Master 4 Ps of marketing
- Understand segmentation
- Know elasticity concepts
- Learn promotion methods
- Relate strategy to products