The nature of marketing
The role of marketing
- Marketing finds out what customers want, then makes and sells products that meet those wants at a profit.
- product-orientated — focus on the product first (suits new/technical products).
- market-orientated — find out what customers want first (lowers risk).
- Customer relationship marketing (CRM) keeps customers coming back (cheaper than finding new ones).
Practice
A market-orientated business:
Market orientation researches customer wants first, lowering the risk of failure.
Markets and segments
- market size (total sales), market growth (% increase), market share (one firm's % of the market):
$$\text{market share} = \frac{\text{firm's sales}}{\text{total market sales}} \times 100\%$$
- mass market — large, high sales, strong competition; niche market — small, special needs, weaker competition.
- Market segmentation splits buyers into similar groups (by age, income, location…) so the firm targets each one.
Practice
A firm sells 4m in a market worth 20m. What is its market share (%)?
Market share = 4 ÷ 20 × 100% = 20%.
Practice
A niche market is:
A niche market is small with special needs and weaker competition; a mass market is large and competitive.
You've got it
Key idea
- marketing meets customer wants at a profit; market-orientated lowers risk vs product-orientated
- market share = firm's sales ÷ total sales × 100%
- mass (big, competitive) vs niche (small, special); segmentation targets similar groups