Unit 4 Key terms - Marketing

It is through the correct use of subject terminology that students show their knowledge and understanding. Effective marketing is core to the success of all business organizations. Unit 4 of the IB Business Management syllabus examines a wide range of marketing tools, theories, techniques and concepts. Marketing is far more than just about advertising or promotion, or even the traditional 4 Ps of marketing: product, price, promotion and place. SL and HL students also need to be able to examine the Marketing topics through the CUEGIS concepts of change, culture, ethics, globalization, innovationand strategy.

Unit 4.1 Key terms - The role of marketing

Commercial marketing	Marketing strategies that focus on meeting the demands (needs and wants) of customers in a profitable way. The main purpose is to generate benefits for the owners of the business, such as shareholders.
For-profit organization	A commercial organization that sells goods and/or services in order to earn a profit for its owners.
Goods	Tangible (physical) products, such as tennis balls, cakes, shoes and cars.
Market	The collective term for the buyers and sellers of a particular product.
Market growth	The increase in the size of a market. It is usually expressed as the percentage increase in the market size over a given period of time.
Market leader	Refers to the firm with the largest market share in the industry.
Market orientation	An approach to marketing that focuses on meeting the specific demands (desires and needs) of customers and potential customers.
Market share	A measure of the size of a business in comparison to others in the same industry, by calculating its proportion of the total value of sales revenue in the industry.
Market size	The number of people in a certain market who are potential customers of a product or service.
Marketing	The business function of determining the goods and services required to meet the needs and wants of customers in a sustainable way.
Marketing objectives	The targets of the marketing department within an organization, in order to help achieve the overall objectives of the business.
Mass markets	Industries that buy and sell mass markets products, catering for a broad range of target markets, such as bottled water or breakfast cereal.
Niche markets	Industries that buy and sell highly specialised products to cater for a small and select target market, such as snowboarders.
Non-profit organization (NPO)	A business that does not primarily aim to earn a profit but to serve a purpose beyond the organization itself, for the betterment society as a whole.
People	The employees who deliver the customer service element of the extended marketing mix.
Physical evidence	The observable and tangible aspects of a service. For example, in a hotel, the physical evidence or physical environment could include the lighting, ambience, cleanliness, aroma, presentation of hotel staff, and the physical size of the building.
Place	Distribution channels that enable customers to conveniently buy the product, such as wholesalers, retailers, agents or vending machines.
Price	The amount paid for a particular good or service. Pricing decisions must entice customers, yet allow the firm to be profitable.
Process	As part of the extended marketing mix (for services) this refers to the way that a service is provided, e.g. payment systems, waiting times and queueing systems, after-sales care, and methods of delivery.
Product	A tangible good or an intangible service that satisfies the needs or wants of the customer.
Product orientation	An approach to marketing that focuses on making products a business knows how to make well, rather than primarily concentrating on the needs and desires of potential customers.
Promotion	Communicating relevant product information to inform and persuade customers to buy the good or service.
Services	Intangible (non-physical) products, such as taxi rides, haircuts, visits to the cinema or theatre, and restaurants.
Social marketing	Marketing activities that aim to influence or change people’s attitudes and behaviour for the good of society as a whole, rather than primarily to make a profit.
Target markets	The group or groups of customers that businesses aim their products at, such as females, children, high-income earners or a particular ethnic group of customers.

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Unit 4.2 Key terms - Marketing planning (including introduction to the 4 Ps)

Bargain products	Goods or services that are those perceived by customers to be of high quality but sold at a low price.
Consumer profiles	The demographic and psychographic characteristics of consumers in different market segments.
Cowboy products	Goods or services that are perceived by customers to be of low quality but high price.
Differentiation	The process of distinguishing an organization’s products from those of other firms in the same industry.
Economy brands	Goods or services that are perceived by customers to be of low quality and sold at a low price.
Geographic segmentation	The marketing process that involves characterising consumers according to their different geographical locations.
Market segment	A distinct group of customers with similar characteristics, tastes and preferences.
Marketing mix	The key elements of a marketing strategy to ensure its success in meeting the needs and wants of the organization’s customers and the firm’s marketing objectives.
Marketing plan	A document that shows the marketing objectives and marketing strategy of a particular business.
Marketing planning	The structured process of formulating marketing objectives and appropriate marketing strategies to achieve these goals.
Marketing strategies	The different long-term actions used by an organization to achieve its marketing goals.
Mass markets	A marketing approach that focuses on supplying to wide-ranging groups of customers in a market, without having split them into separate market segments, such as the markets for bottled water or breakfast cereal.
Niche markets	Marketing approach that focuses on supplying highly specialised products to cater for a small and select target market.
Place	The methods used to distribute products to customers, such as the use of wholesalers, retailers, agents or even vending machines.
Premium products	Goods or services that are perceived by customers to be of high quality and high price.
Price	The amount that customers pay to purchase a particular product.
Product	A physical good or an intangible service sold by a business. This term can be used to refer to goods and/or services.
Product position map	Also known as a perception map, this is a graphical illustration of customer perceptions of a business, its products, and/or brands in comparison to other firms in the industry.
Promotion	Communicating with customers so that they know about the product, and are persuaded to buy it.
Psychographic segmentation	Segmentation that involves characterising consumers according to people’s lifestyle choices and personal values.
Target market	The group of customers that an organization focuses on selling its products to.
Targeting	Targeting is the marketing practice of creating and using an appropriate marketing mix and marketing strategies to cater for different market segments.
Unique selling point (USP)	An exclusive feature or aspect of a business, its products, or brands that makes it distinct from others in the same industry.

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Unit 4.3 Key terms - Sales forecasting (HL Only)

3-point moving average	The arithmetic mean of three consecutive numbers, such as sales revenue figures for the past three months.
4-point moving average	The arithmetic mean of four consecutive numbers, such as sales revenue figures for the past four months.
Correlation	The relationship between two sets of numbers or variables, such as sales revenue at different times of the year.
Cyclical variations	The recurring fluctuations in sales revenues due to the trade cycle (or business cycle).
Extrapolation	A forecasting technique that identifies the trend from using past data and then extending this trend line to predict future sales.
Mean	The most common measure of an average, by calculating the sum of all the numbers in the data set divided by the number of items in that data set.
Median	The average based on the middle value of the data set, which splits values in the higher half from those in the lower half.
Modal	The average as measured by the number or value that occurs most frequently in a data set.
Moving average	A mathematical method used to discover the underlying trend in a data set by smoothing out such variations in a data set.
Random variations	Irregular, erratic or unexpected fluctuations in sales revenues, caused by unexpected and unpredictable factors.
Range	The difference between the highest and the lowest values in a data set.
Sales forecasting	A quantitative technique used to predict a firm’s level of sales revenue over a given time period.
Seasonal variations	Foreseeable periodic fluctuations in sales revenues over a known period of time, such as certain months or times of the year.
Time series analysis	A statistical technique used to identify trends in historical data, such as the figures for a firm’s monthly sales revenues.

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Unit 4.4 Key terms - Market research

Academic journals	Also known as scholarly journals, these are publications that contain the latest educational research and academic theory.
Ad-hoc market research	Market research conducted as and when required for a specific problem that the organization is facing.
Bar graphs	Method of visual presentation of data, used to compare figures in a study, such as sales figures during different time periods.
Cluster sampling	Sampling method that involves identifying the population by geographical areas (clusters), and then interviewing people within certain clusters randomly.
Consumer panel	A focus group comprised of people who belong to the firm’s target segment(s), referred to in order to gather their expert feedback.
Continuous market research	A type of market research that is conducted on an ongoing basis, rather than a one-off basis.
Convenience sampling	Sampling method that refers to the practice of using people that are within easy reach, in an unplanned way, to conduct market research.
Ethics	The moral principles and values held by society. Regarding the ethics of market research, this refers to all aspects of how the research is designed to how the results are shared and presented.
Focus groups	Small groups of targeted customers with similar characteristics and/or similar interests.
Government publications	These are official documents released by governments and government agencies.
Histograms	Type of bar graph, used to show frequency and the range within a data set.
Interviews	Market research method that involves dialogue between the interviewer (the market researcher) and the interviewees (respondents to the market research).
Line graphs	Method of visual presentation of data, used to show time-series data, i.e. changes in variables over time.
Market research	Refers to the range of marketing activities designed to determine the opinions, beliefs and feelings of existing and potential customers.
Media articles	Professional documents or articles in print or online media. Unlike academic journals, media articles are written by trained journalists and authors, rather than by academics at university.
Non-sampling error	When an inappropriate sampling methodology is used, i.e. mistakes not attributed to human errors in market research design.
Observations	A form of primary market research that involve researchers watching, monitoring and recording how customers behave or react to certain situations.
Pie charts	Method of visual presentation of data, used to show percentages, such as the percentage of participants who chose a particular option in a survey.
Population	Refers to all members of a particular group or market.
Primary research (or field research)	The process of conducting market research to collect new (original) data to gain more insight into the issue being investigated, such as questionnaires, interviews, observations and focus groups.
Qualitative research	A category of market research based on the opinions of participants. It creates detailed and non-numerical information.
Quantitative research	A category of market research based on gathering facts and figures, i.e. quantifiable data.
Quota sampling	A form of sampling in which the researcher selects a certain number of people from each market segment and then grouped according to characteristics (such as age or gender).
Quota sampling	The sampling technique where researchers select a number of candidates from different market segments and then group them together according to various characteristics.
Random sampling	Sampling method that selects anyone in the population for market research, allowing all respondents the same equal chance of being selected.
Sample	The proportion or subgroup of the population selected for market research purposes.
Sampling error	When a researcher inappropriately designs market research, resulting in bias and unrepresentative results.
Scatter diagrams	Method of visual presentation of data, used to show possible correlations between two variables, such as consumer income and expenditure levels.
Secondary research	Also known as desk research, this refers to the collection of data and information that has already been collected by another source, i.e. the data or information already exists. Examples include gathering sources from trade journals, specialist magazines, newspapers and government statistics.
Snowballing	Sampling method that relies on participants referring or recommending further subjects to take part in the market research.
Stratified sampling	A sampling method where the population is segmented into various strata (layers of sub-groups) that share similar characteristics – rather like with quota sampling.
Survey	A data collection tool used to gather primary market research about individuals or their opinions, using a series of standardised questions.

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Unit 4.5 Key terms - The marketing mix (Product, Place, Promotion, Place)

The marketing mix: Product

BCG matrix	Developed by the Boston Consulting Group (BCG), this visual marketing management tool is used to analyse a firm’s product portfolio.
Brand awareness	The degree of customer knowledge and recognition of a particular brand in order to gain more customers.
Brand development	Part of a firm’s marketing strategy in communicating the value of a brand and what the brand stands for.
Brand loyalty	The degree of customer devotion to a particular brand.
Brand value	The expected earning potential of a brand, i.e. the likely future earning potential (value) of a particular brand.
Cash cows	Products in the BCG Matrix with high market share in a low growth (mature) market. They are the largest cash earners for a business.
Dogs	Products in the BCG Matrix that operate in low growth markets yet have low market share, so are at the end of their product life cycle.
Extension strategies	Marketing approaches used to prolong or lengthen a product’s life cycle, such as price reductions or new promotional strategies.
Packaging	The art of presenting a product in an advantageous way.
Product life cycle (PLC)	Marketing theory showing the different stages that most products go through from their research and development (R&D) stage to their final removal from the market.
Question mark	Also referred to as problem child, this is a product in the BCG Matrix that have low market share in a high growth market.
Stars	Products in the BCG Matrix with high or rising market share in a high growth market.

The marketing mix: Price

Cost-plus pricing (or mark-up pricing)	Adds a profit margin to the costs of production, thereby ensuring that each unit sold contributes towards the profits of the firm.
Loss leader pricing	Pricing a product below its cost of production so as to attract customers to also buy other items (with a higher profit margin).
Mark-up (or the profit margin)	The difference between the price and the cost per unit.
Penetration pricing	Setting a low price in order to enter an industry, which allows the firm to compete against existing firms and to gain market share.
Predatory pricing	A strategy that involves charging a low price, sometimes even below the cost, so as to damage the sales of rivals.
Price	The value of a good or service that is paid by the customer.
Price discrimination	Involves a business charging different prices to different market segments for basically the same good or service, such as adult and child fares at the cinema, theme park or concert.
Price leadership	A strategy of following the price set by the dominant firm in the industry (the firm with the largest market share).
Psychological pricing	Uses numbers and decimals in such a way to make the price seem (artificially or psychologically) lower, such as $9.95 instead of $10.
Skimming	The pricing strategy that sets a high price during the introductory (launch) of a new and original product, with gradual price reductions as rival products enter the market.

The marketing mix: Promotion

Above the line promotion (ATL)	Form of promotion that refers to any form of paid-for promotional technique through independent consumer media.
Advertising	A form of visual and/or audio marketing communication used to inform and persuade people to buy a certain good or service.
Below the line promotion (BTL)	Form of promotion that refers to all forms of advertising or promotion that do not use external media agents.
Celebrity endorsement	The use of famous people (such as film stars, musicians and sports personalities) to promote a brand or organization.
Customer loyalty schemes	Reward systems used to encourage customers to make repurchases, such as price discounts or free gifts for members.
Direct mail	The use of postal correspondence for promotional purposes.
Direct marketing	Refers to a business communicating information about its products straight to customers.
Guerrilla marketing	The use of unconventional but innovative promotional strategies that make a major impact but at a fraction of cost of traditional above the line (ATL) promotional methods.
Merchandise	Refers to a retailer’s range of goods that are available for sale.
Personal selling	The use of sales personnel to sell goods and services with customers on a face-to-face basis.
Point of sale (POS)	The promotion of products in retail outlets where customers can buy the goods.
Promotion	The various marketing processes used to inform customers about a product and persuading them to purchase the product.
Promotional mix	The range of above and below the line methods used to promote a product as part of a larger marketing mix.
Public relations	The management function overseeing public attitudes and opinions of an organization to gain public understanding and support.
Sales promotion	A short term promotional tactic used to entice customers to buy a certain product.
Social media marketing (SMM)	The use of online content that users can upload to a website using a suitable medium, such as a blog, podcast, video or image.
Social networking	This refers to the use of Internet based websites, platforms and apps to share online content by building online communities.
Sponsorship	A promotional strategy that involves a business providing financial support to another organization or event in return for marketing exposure.
Trade fair	Promotional event where specialist firms exhibit their products for sale to potential customers.
Viral marketing	The spread of information about a business, its brands and its goods and services from one Internet user to others.

The marketing mix: Place

Agents	These independent intermediaries help to sell a vendor’s products in return for commission, such as real estate agents.
Distribution (place)	The marketing process of getting the right products to the right customers in the right place and at the right time.
Distribution channel	Also known as a channel of distribution, this refers to the path taken for a product to get from the producer to the consumer.
Intermediary	A third-party person or business that offers distribution services as part of a channel of distribution, such as agents, wholesalers and retailers.
One-channel distribution network	This method of distribution involves the use of a single intermediary, such as an agent or retailers.
Retailers	These are commercial businesses that sell a manufacturer’s products directly to consumers.
Telemarketing	The use of telephone systems to sell products directly to the potential customers, such as insurance, movie tickets or package holidays.
Three-channel distribution network	This type of distribution channel uses three intermediaries. It often involves an agent who sells the goods to wholesalers on behalf of the producer. In turn, wholesalers sell to retailers.
Two-channel distribution network	This method of distribution involves the use of two intermediaries, usually wholesalers and retailers.
Wholesalers	These are intermediaries that buy products from a manufacturer and sell these in smaller quantities to retailers.
Zero-channel distribution network	Also known as direct distribution, this method does not use any intermediaries, i.e. the producer sells directly to the consumer.

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Unit 4.6 Key terms - The Extended Marketing Mix (HL Only)

Goods	These are physical products, such as handbags, cars, and laptops.
People	In the extended marketing mix, this refers to an organization’s employees who are vital as they are the ones who interact with customers and deliver the service.
Physical evidence	In the extended marketing mix, this refers to the tangible aspects of a service, such as the physical appearance or tangible aspects of a restaurant, hotel, school or coffee shop.
Process	In the extended marketing mix, this refers to the way in which a service is provided or delivered to customers.
Services	These are intangible products, such as education, haircuts, and train rides.

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Unit 4.7 Key terms - International Marketing (HL Only)

Business etiquette	This refers to the mannerisms and customs by which business is conducted in different parts of the world.
Cultural exports	This refers to the extensive availability and consumption of traditionally domestic products in overseas markets.
Direct investment	This involves a business setting up operations in other countries, such as production facilities or distribution services.
E-commerce	This refers to the buying and selling of goods and services via electronic means, most notably the Internet.
Exporting	This method of entering international markets involves a business selling its products to overseas customers without having to physically establish production or distribution facilities abroad.
Franchising	This involves international marketers seeking a third party organization (the franchisee) to supply the goods and services of another business (franchisor).
Globalization	This is the process of the integration and interdependence of the world’s economies, in terms of social, political and economic convergence.
Joint venture	International marketers use this method to sell their products in overseas markets by two or more parent companies forming a new business entity in its own legal right.
International marketing	This refers to the marketing of an organization’s goods and services in overseas markets.
Legal constraints	These rules and regulations of a country set the permissible parameters that international marketers can operate within, such as consumer protection laws.
Operational implications	This refers to the daily operations of a business, such as monitoring of exchange rates and conducting market research in order to remain competitive.
Opportunities	These are factors in the external business environment that create prospects or openings for a firm’s growth and development.
Strategic alliance	This method is used by international marketers to sell their products in overseas markets by using partner firms in other countries, working in collaboration on a specific project.
Strategic implications	This refer to the longer term operations of a business, such as the formation of a strategic alliance or joint venture as part of an international marketing strategy.
Threats	These are the external factors that create challenges for an organization wishing to expand in overseas markets.

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Unit 4.8 Key terms - E-commerce

Business to business (B2B)	B2B refers to e-commerce that takes place between two or more organizations, rather than between businesses and consumers.
Business to consumer (B2C)	B2C refers to online businesses selling goods and services directly to consumers, i.e. the end users of the products.
Consumer to consumer (C2C)	The third type of e-commerce is called C2C, which involves customers selling directly to other consumers.
Cybercrime	Refers to online fraudulent activities, such as hacking of personal data and exploitation of internet security.
E-commerce	The buying of goods and services online, using Internet technologies.
E-tailer	An online business that otherwise operates like a traditional retailer.
Footloose operations	E-commerce businesses can operate away from prime (and expensive) locations.
Price transparency	The openness in communications about the different prices being charged by different online businesses.

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Unit 4 Key terms - Marketing

Unit 4 Key terms - Marketing

Unit 4.1 Key terms - The role of marketing

Unit 4.2 Key terms - Marketing planning (including introduction to the 4 Ps)

Unit 4.3 Key terms - Sales forecasting (HL Only)

Unit 4.4 Key terms - Market research

Unit 4.5 Key terms - The marketing mix (Product, Place, Promotion, Place)

Unit 4.6 Key terms - The Extended Marketing Mix (HL Only)

Unit 4.7 Key terms - International Marketing (HL Only)

Unit 4.8 Key terms - E-commerce