Marketing - The business function that identifies the desires of customers, and design a product that will meet their needs and wants. Marketing includes creating the product concept, identifying the market segments most likely to purchase it, promoting it, and moving it through the appropriate distribution channels to reach the consumer.
Heterogeneity - Whereas goods can be mass-produced and standardised, each experience of a service is different for customers as services cannot be precisely replicable. Hence, service providers must be highly-trained and skilled at serving with consistently high quality.
Perishability -The intangible nature of services also means they cannot be stored or reserved for future use; if appointments are missed, the opportunity cost translates directly to a loss in revenue. Whereas goods can be stored for future sales if there is leftover stock after the trading period.
Product Strategy - For both goods and services, a unique selling point is required, in the form of value-added extensions, that help the product stand out from competitors.
Price Strategy - For goods, pricing is simple: the price must cover the costs of production and generate profit, while keeping in line with the image of the business. Whereas for services, costs are determined from intangible aspects such as qualifications of service providers, industry rates, and time spent on the service.
Promotional Strategy - Services are intangible, so promoting a service as better than a competitor’s is difficult. Whereas the tangible benefits and attributes of goods are evident to customers and hence easier to communicate.
Place Strategy - Location of services must be customer-oriented, providing maximum convenience and ease of use. Whereas goods can be stored or produced in locations that maximise financial and productive efficiency.
Market Orientation - Outward-looking marketing approach that is focused on making products that can sell, rather than selling whatever products they want to make. Market orientation relies heavily on market research to identify, design, develop and supply products that meet the needs and wants of customers in a profitable way.
Lower Risk - With comprehensive market research to ensure products meet expectations and desires of the market, businesses can be confident that there will be a market demand for the product.
Dynamic Environment - Due to the dynamic business environment and uncertainty of the future, there is no guarantee that the market demand for a product will sustain until after the business has begun sales to recoup the costs of research and production.
Product Orientation - Inward-looking marketing approach focused on developing high-quality products regardless of the wants and needs of the market. Product-oriented businesses focus on innovation to solve problems that have not yet been noticed, sometimes creating entire industries in the process.
First Mover Advantage - Businesses that successfully identify and meet the unpredictable wants and needs of customers will enjoy a significant advantage of leading an entire new industry, such as Netflix did with subscription-based on-demand entertainment, or Apple with smartphone technologies.
High Risk - Businesses that pour heavy investments into research and development to identify and develop products that have not yet been tested in the market could well be risking their survival if the predicted market demand is not there when the product is launched. The costs of research and production may never be recouped.
Commercial Marketing - The use of marketing strategies to meet the needs and wants of customers in a profitable way; providing customers with what they want, when and where they want it. Commercial marketing seeks to influence purchasing decisions for financial gain.
Social Marketing - Planning and implementing programs designed to bring about social change using commercial marketing methods. Social marketing seeks to influence behaviour, usually for the good of society or the community.
Purpose - Commercial marketing aims to raise brand and product awareness in order to increase sales of goods and services to the target market. Social marketing aims to influence or persuade a desired change in social behaviour or attitudes, often without any monetary gain.
Main Adopters - Commercial marketing is mainly used by private sector and profit-seeking businesses, whereas social marketing is usually used by social enterprises and public sector organisations.
Market - Place or process whereby customers and suppliers trade. Markets exist where there are demands for particular products to solve problems or fulfil desires, and where there are businesses willing to supply these products, usually at a profit.
Market Size - Measured by sales revenue across the industry, the potential size of the market will detail the opportunities for growth for the business, and the potential size of the customer base the business will tap into.
Barriers to Entry - The obstacles that determine the number of suppliers in the market, such as cost of essential fixed assets, the concentration of market share within the industry, and connections within the industry. Barriers to entry will either deter or encourage new businesses from entering the market and challenging the larger players.
Market Growth Rate - The increase in the size of the market per period of time, measured by an increase in the value of stocks or the volume of sales in the market. Markets with a high growth rate present more opportunities for businesses to grow in proportion.
Seasonal and Cyclical Characteristics - Some markets are constrained by seasonal factors, such as tourism, winter apparel, and the sale of textbooks.
Market Share - An organisation’s portion of the total value of sales revenue within a specific industry. Market share is regarded as one of the main determinants of business profitability and success.
Market Concentration - A measure of the degree of competition that exists within a market, by calculating the market share of the market leaders.
Economies of Scale - The greater a firm’s market share, the larger their scale of operations. With large-scale productions, economies of scale are achieved in manufacturing, marketing, and other cost components. Since market share is a measure of sales, businesses with large market shares generally also have large cumulative sales. Combining lower unit costs of production with large sales would equate to large profits for the business.
Market Power - Influence over the market, such as high bargaining power in negotiations, talent attraction, and being able to administer prices, puts the business in a position of control over its own security and success.
Quality of Management - High market share is a consequence of competency in management, which translates to competency in other factors of business operations such as controlling costs, motivating employees to maximum productivity, evaluating business decisions and so on. Moreover, businesses with large market shares will be able to retain talented employees.
Successful businesses are those who manage to adapt to changing market trends and demands, failure to adapt will threaten the survival of the business, as we have seen with businesses like Blockbuster, Toys R Us, and Kodak. The marketing department is responsible for identifying changes and potential changes in market trends and demands, and they must adapt marketing strategies to the changes so that the business can continue to satisfy its evolving customer base.
Changing Social Norms - Globalisation, and the integration of cultures throughout the world, has had incremental changes to the preferences of society. The fusion of cultures in people’s daily lives change their tastes; American broadcasting services may include Korean entertainment, shopping centers in China include European clothing labels, food delivery services in Singapore include American fast food chains.
Short Product Life Cycles - Marketing strategies at different stages of a product’s life cycle have different objectives: before sales launch there may be strong promotional strategies to increase brand awareness, whereas when sales begin to peak, extension strategies are deployed to prevent a decline in sales. In a highly competitive industry, failure to stay ahead of the product life cycle will result in a loss of market power as customers move on to brands that are keeping current.