Marketing & Markets (SL IB Business Management)

• A market is any place where buyers and sellers can meet to conclude a transaction e.g. amazon.co.uk or a shopping mall
  
  
• Different markets have different characteristics and are affected differently by changes
  
  
• The aim of marketing is to help identify, anticipate and satisfy consumer needs and wants profitably
  • Needs are considered to be essential e.g. shelter or food
  • Wants are desires which are non essential, even if consumers consider them to be essential e.g Nike trainers
    
    
• Market research is essential in helping businesses to identify products/services they can develop in response to the needs and wants that their customers have
   
• Market research is the process of systematically gathering data from consumers which can be used to influence the business decisions

• Product orientation is an approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer
  • The emphasis will be on creating a product first and then finding a market
  • The business has a belief that the product is superior i.e. it will sell itself
  • One problem with being too product orientated is that over time your business may move further and further away from what the market is looking for, thus increasing the risk of business failure
  • E.g. Gillette's razors can be classed as a product oriented business as the business focuses on the quality of its products and regular innovations aim to increase sales
      

A product orientation is an approach often used by inventors who research, test and produce a product well before market research has taken place
 

• Market orientation is an approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs 
  • Consumers are at the centre of marketing decisions
  • Products will be developed which respond to consumer needs
  • The result of market orientation is that the firm will benefit from increased demand, increased profits, and a valued brand image as its products become more desirable 
  • E.g. Universities often develop new courses based on the feedback they receive from students and employers
     

Market orientation aims to develop products to meet consumer needs identified during the market research process

• The size of a market can be measured through  sales volume  or sales value
  • Sales volume is the number of products sold i.e the physical number of units sold
  • Sales revenue = price x quantity sold i.e the financial value of the units sold
     
• The market share that a business enjoys is the proportion of the total sales of a product/service as a proportion of the size of the market as a whole
  • E.g. Tesco has 26% of the UK grocery market
      
• Market share can be calculated using the formula
  
  

• An increase in market share can indicate that a business has made effective use of marketing strategies to increase sales and gain customers from competitors

• Market growth is the increase in the overall size, value or volume of a market over a period of time usually expressed as a percentage
  • This metric considers the size of the whole market/industry as opposed to a single firm's share of the market
      
• Some common ways to measure market growth include sales revenue, sales volume or the number of customers
   
• Market growth is calculated using the formula
   

• If the growth rate is positive the market is getting bigger (expanding)
   
• If the growth rate is negative the market is getting smaller (contracting)

• Market growth provides an incentive for businesses looking to expand, increase sales and generate higher revenue
• Businesses are often attracted to the potential of growing markets - and they can become increasingly competitive quite rapidly

Market growth can vary significantly across industries and can occur for a range of reasons

• In niche markets, products are aimed at a subset of the larger market e.g. gluten free products
  • Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market
  • Production usually happens on a small scale
    
    
• In mass markets, products are aimed at broad  market segments e.g Kellogg's Corn Flakes is an example of a breakfast cereal aimed at the mass market
  
  • Market segments are groups of consumers who share similar characteristics e.g. age, lifestyle, etc.
  • Mass marketing occurs when businesses sell their products to most of the available market 
  • Production usually happens on a large scale
     

Characteristics of  Niche Markets & Mass Markets