4.1: Introduction to Marketing

What is marketing

Marketing is the process of identifying, anticipating, and satisfying consumer needs profitably. It involves understanding customers' wants and needs, creating products that meet those demands, and effectively promoting and distributing those products.

Market orientation is a business approach that focuses on understanding and meeting customer needs. It involves market research, product development, and pricing decisions based on customer data.
Key points:
Market orientation vs. product orientation: Market-oriented businesses prioritize customer needs, while product-oriented businesses prioritize their products.
Benefits of market orientation: Greater flexibility, lower risk, and better customer satisfaction.
Challenges of market orientation: Expensive market research and uncertainty about future trends.
Product orientation: Businesses that focus on creating innovative products without considering customer needs.
Advantages of product orientation: Quality control, competitive advantage, and innovation.
Disadvantages of product orientation: High risk of failure, potential mismatch with customer needs.
Choosing an approach: The choice between market and product orientation depends on factors like the market, organizational culture, and barriers to entry.

Market share is a measure of an organization's portion of the total sales revenue in a specific industry. It's calculated by dividing the organization's sales revenue by the industry's total sales revenue and multiplying by 100.
Key points:
Importance of market share: High market share often leads to better pricing power, less competition, and increased profits.
Benefits of high market share: Status, economies of scale, and brand loyalty.
Increasing market share: Businesses can increase market share through promotion, product development, workforce training, intellectual property protection, and efficient distribution.
Market leaders: Businesses with the highest market share in their industry.

Market growth is the increase in the size of a market over time, usually measured as a percentage change in total sales. It's an important factor for businesses considering entering a market.
Key points:
Calculating market growth: The formula for calculating market growth rate is: (Current market size - Original market size) / Original market size * 100.
Importance of market growth: Businesses often strive for growth to increase market share, profits, and shareholder value.
Market growth and business success: A firm's performance relative to its market can be measured by comparing its market share growth to overall market growth.
Customer loyalty: Building customer loyalty is essential for maximizing the benefits of market growth. Brand loyalty can improve market share, profits, and facilitate brand extension.

Market leadership refers to a business having the largest market share in a specific industry. Market leaders often dominate the market in terms of pricing, promotion, brand value, quality, and distribution.
Key points:
Market leader benefits: Premium pricing, lower production costs, longer product life cycles, favorable distribution terms, increased publicity, and easier recruitment.
Maintaining market leadership: Market leaders aim to attract new customers, increase repeat purchases, and divert customers from competitors.
Market concentration: Measures the competitiveness of an industry based on the market share of the largest firms.