3.1 Marketing, competition and the customer
Marketing
The process of identifying, anticipating and satisfying customer needs profitably.
Customer needs
The goods and services that customers require or consider necessary to satisfy their needs and wants.
Customer wants
The goods and services that customers would like to have but which are not necessarily essential.
Customer satisfaction
The extent to which a product or service meets or exceeds customer expectations.
Customer loyalty
When customers repeatedly purchase from the same business because they are satisfied with its products or services.
Customer relationship
The ongoing connection between a business and its customers, developed through communication, service and satisfying customer needs.
Consumer spending patterns
The way consumers distribute their income among different goods and services.
Changing customer needs
Changes in what customers require or prefer over time, which may result from changes in income, lifestyles, technology, fashion or age.
Market
A group of customers who are willing and able to buy a particular product or service.
Market competition
The rivalry between businesses selling similar products or services to attract customers and increase sales.
Competitor
A business that sells similar products or services and competes for the same customers.
Competitive market
A market in which several businesses compete to attract customers through factors such as price, quality, product features and promotion.
Market share
The percentage of total sales in a market that is made by one particular business.
Market growth
An increase in the total sales or value of a particular market over a period of time.
Market-oriented business
A business that uses market research to identify customer needs and develops products or services to satisfy those needs.
Product-oriented business
A business that focuses mainly on developing and producing products, rather than starting with detailed research into customer needs.
Mass marketing
A marketing approach in which a business aims to sell products to a large market with broadly similar needs, rather than targeting a small specialised group.
Niche marketing
A marketing approach that targets a small, specialised section of a larger market with specific needs or preferences.
Market segmentation
Dividing a market into smaller groups of customers with similar characteristics or needs so that products and marketing can be targeted more effectively.
Demographic segmentation
Dividing a market according to characteristics such as age, gender, income or family size.
Geographic segmentation
Dividing a market according to the location of customers, such as country, region, city or climate.
Socio-economic grouping
Classifying customers according to factors such as income, occupation, education and social status.
Target market
The particular group of customers that a business aims to sell its products or services to.
3.2 Market research
Market research
The process of collecting, analysing and interpreting information about customers, competitors and markets to help business decision-making.
Market research data
Information collected about customers, competitors and markets to help a business understand market conditions and make decisions.
Primary research
The collection of new information directly from its original source for a specific research purpose.
Secondary research
The use of information that has already been collected by another person or organisation for a different purpose or for general use.
Questionnaire
A set of written questions used to collect information from people about their opinions, preferences or buying behaviour.
Postal questionnaire
A questionnaire sent to respondents by post for them to complete and return.
Online survey
A questionnaire completed through the internet to collect information from respondents.
Interview
A research method in which a researcher asks questions directly to individuals to collect detailed information.
Focus group
A small group of people brought together to discuss a product, service or topic so that a business can understand their opinions and attitudes.
Sampling
Selecting a smaller group of people from a larger population to take part in market research.
Sample size
The number of people or items included in a market research sample.
Population
The entire group of people or items that a business wants to study through market research.
Representative sample
A sample that reflects the important characteristics of the wider population being studied.
Primary data
Information collected directly by a business or researcher for a particular research purpose.
Secondary data
Information that already exists and has been collected by another organisation or individual.
Internal secondary research
Existing information collected from within the business, such as sales records, customer databases and previous research reports.
External secondary research
Existing information collected from outside the business, such as government statistics, industry reports and commercial research publications.
Government statistics
Information collected and published by government departments, often about population, employment, income and consumer spending.
Commercial market research report
A report produced by a specialist research organisation that provides information and analysis about a market, industry or group of consumers.
Quantitative data
Information expressed in numbers, such as sales figures, percentages, prices or the number of customers.
Qualitative data
Information that describes opinions, attitudes, preferences and reasons for customer behaviour rather than numerical measurements.
Market research accuracy
The extent to which collected research information is correct, reliable and reflects the market being studied.
Biased information
Information that is unfairly influenced by the way questions are asked, the people selected or the researcher’s opinions.
Reliable data
Information that is consistent and can be depended upon when making business decisions.
Market research findings
The results and conclusions obtained after collecting and analysing market research information.
Bar chart
A graph that uses rectangular bars to compare quantities or values between different categories.
Pie chart
A circular chart divided into sections to show how a total is divided among different categories.
Line graph
A graph that uses points joined by lines to show changes in data, often over time.
Trend
A general pattern or direction of change shown by data over a period of time.
3.3 Marketing mix
Marketing mix
The combination of four elements that a business uses to market its products: product, price, place and promotion.
Product
A good or service offered by a business to satisfy customer needs and wants.
Product development
The process of designing, improving or creating products to meet customer needs and respond to market opportunities.
New product development
The process of creating and introducing a new product to the market.
Brand
A name, symbol, design or combination of these used to identify a product or business and distinguish it from competitors.
Brand image
The impression or perception that customers have of a brand, based on its reputation, quality, design and other characteristics.
Brand loyalty
When customers repeatedly buy products from the same brand rather than switching to competitors.
Packaging
The materials and design used to contain, protect and present a product to customers.
Product life cycle
The stages a product passes through from its introduction into the market until its sales eventually decline or it is withdrawn.
Development stage
The stage before a product is launched when it is researched, designed and tested. Costs may be incurred but there are no sales yet.
Introduction stage
The stage when a product is first launched into the market. Sales are usually low and promotional costs may be high.
Growth stage
The stage when sales increase rapidly as more customers become aware of and purchase the product.
Maturity stage
The stage when sales reach a high level and begin to stabilise as the product becomes well established in the market.
Saturation
A situation in which most potential customers in a market already own or use the product, making further sales growth difficult.
Decline stage
The stage when sales of a product fall, often because of changing customer preferences, new technology or increased competition.
Extension strategy
A marketing activity used to extend the life of a product by maintaining or increasing its sales during the maturity or decline stage.
Price
The amount of money customers are required to pay to purchase a product or service.
Cost-plus pricing
A pricing method in which a business calculates the cost of producing a product and adds a percentage or amount of profit to determine its selling price.
Competitive pricing
A pricing method in which a business sets its price by considering the prices charged by competitors.
Penetration pricing
A pricing method in which a business sets a low initial price to attract customers quickly and gain market share.
Price skimming
A pricing method in which a business sets a high initial price for a new or innovative product, often reducing it later as competition increases.
Promotional pricing
A pricing method in which a business temporarily reduces the price of a product to encourage customers to buy it.
Price elasticity of demand (PED)
A measure of how responsive the quantity demanded of a product is to a change in its price.
Price elastic demand
When a change in price causes a proportionately greater change in the quantity demanded. Customers are relatively responsive to price changes.
Price inelastic demand
When a change in price causes a proportionately smaller change in the quantity demanded. Customers are relatively less responsive to price changes.
Place
The methods and channels a business uses to make its products available to customers.
Distribution
The process of moving products from the producer to the final customer.
Distribution channel
The route through which a product passes from the producer to the final customer.
Direct distribution
A distribution channel in which the producer sells directly to the final customer without using intermediaries.
Wholesaler
A business that buys products in large quantities from producers and sells them in smaller quantities to retailers.
Retailer
A business that sells goods directly to final consumers, usually in smaller quantities.
Intermediary
A business or organisation that operates between the producer and the final customer in a distribution channel.
Promotion
The methods used by a business to inform, persuade and remind customers about its products or services.
Advertising
A paid form of communication used by a business to inform or persuade potential customers about its products or services.
Sales promotion
Short-term incentives used to encourage customers to purchase a product, such as discounts, coupons, competitions and free samples.
Marketing budget
The amount of money a business plans to spend on marketing activities, including advertising, promotion and market research.
Cost-effectiveness
Achieving the desired result from an activity while keeping costs as low as reasonably possible.
E-commerce
The buying and selling of goods and services through electronic networks, particularly the internet.
Online shopping
The process of purchasing goods or services through websites or digital applications rather than visiting a physical store.
Social media marketing
The use of social media platforms to promote products, communicate with customers and build brand awareness.
Digital promotion
The use of digital channels, such as websites, search engines, email and social media, to promote products and services.
3.4 Marketing strategy
Marketing strategy
A planned approach to using the marketing mix to achieve business objectives and attract the intended customers.
Marketing plan
A document setting out a business’s marketing objectives, target market, marketing activities, budget and methods of measuring results.
Marketing objectives
The specific goals a business wants to achieve through its marketing activities, such as increasing sales, gaining market share or building brand awareness.
Target customers
The particular group of consumers a business intends to attract and sell its products or services to.
Integrated marketing mix
A combination of product, price, place and promotion decisions that work together to achieve the business’s marketing objectives.
Consumer decision
The choice made by a customer about whether, what, when and where to purchase a product or service.
Legal controls on marketing
Laws and regulations that businesses must follow when marketing and selling products, including rules about misleading promotion and unsafe or faulty goods.
Misleading promotion
Advertising or promotional information that gives customers false or deceptive impressions about a product or service.
Faulty goods
Products that do not work properly, fail to meet required standards or are not as described to customers.
Dangerous goods
Products that may cause harm to customers or other people if they are used, handled or stored incorrectly, or if they do not meet safety requirements.
Consumer protection
Laws and measures designed to protect customers from unsafe products, misleading information and unfair business practices.
Foreign market
A market in another country where a business may sell its products or services.
International marketing
The marketing of products or services in markets outside a business’s home country.
Market entry
The process of entering a new market, such as selling products in another country for the first time.
Foreign market opportunities
Potential benefits of selling in another country, such as access to more customers, increased sales and business growth.
Cultural differences
Differences in language, beliefs, traditions, values and consumer preferences between people in different countries or regions.
Local market knowledge
Understanding the customers, competitors, culture, laws and business conditions in a particular local market.
Joint venture
An arrangement in which two or more businesses agree to work together on a particular project or business activity, sharing resources, risks and rewards.
Licensing
An agreement in which a business allows another business in a different market to use its brand, product design, technology or other intellectual property in return for a fee or royalty.
Royalty
A payment made to the owner of intellectual property for permission to use it, often calculated as a percentage of sales.