Flashcards · IB Diploma Programme Business · Topic 4

Unit 4: Marketing flashcards

31 cards on Topic 4, subtopics 4.1 to 4.6. Pick a subtopic or study them all.

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4.1 Introduction to marketing

Market orientation vs product orientation: Market orientation: decisions start from customer needs found through research; lowers the risk of an unwanted product. Product orientation: start from what the business can make, then seek buyers; can lead to innovation.
Market share and market growth: Market share = business's sales ÷ total market sales × 100. Market growth = (this period − last period) ÷ last period × 100. Read them together.
Sales rise from 1.8m to 1.89m while the market rises from 30.0m to 33.0m. Share?: Share falls from 6.0% to 5.7%: sales grew 5.0% but the market grew 10.0%.
Sales needed for a target share of 15% in a market expected to be worth 40.0m: Target share as a decimal × expected market sales = 0.15 × 40.0m = 6.0m.
Importance of market share and market leadership: For: purchasing power, brand strength, retailer and investor confidence, ability to influence price. Against: costly to win and defend, may distract from profit, complacency. (HL only)

4.2 Marketing planning

Role of marketing planning: Turns overall objectives into marketing aims, actions, budgets and timings; sets measurable targets; coordinates actions; lets managers compare results with the plan. It relies on forecasts, so needs review.
Segmentation, targeting and positioning: Segmentation: dividing a market into groups with shared needs or characteristics. Targeting: choosing which segment(s) to serve. Positioning: how customers see the product compared with rivals.
Position map: A chart with two axes (for example price and quality). Brands close together are direct rivals. An empty area is only an opportunity if enough customers want it and it can be supplied profitably.
Niche vs mass market: Niche: a small, specialized segment; often less competition and a premium price, but a small customer base and a larger rival may enter. Mass: a large market with similar needs; high competition and low margins.
USP and differentiation: A USP is a feature or benefit that sets a product apart in a way customers value, stronger if rivals cannot copy it. Differentiation is the wider effort to stand apart; worthwhile only if extra revenue exceeds extra cost.

4.3 Sales forecasting (HL only)

Benefits of sales forecasting: Plans production, purchasing and stock; shapes the cash flow forecast and borrowing case; guides recruitment; sets promotion budgets; gives targets to compare with actual sales. (HL only)
Limitations of sales forecasting: Assumes past patterns continue; external change (competitors, tastes, economy); one-off shocks; longer forecasts carry more error; thin data for new products; bias; cost and time; false confidence. (HL only)
Simple linear regression: line of best fit: y = a + bx, with gradient b = Sxy ÷ Sxx and intercept a = ȳ − b·x̄. Example: sales 120, 132, 145, 151, 166 give y = 109.5 + 11.1x, so year 6 ≈ 176. (HL only)
Correlation, interpolation and extrapolation: Correlation (r from −1 to +1) shows how closely points follow a straight line. Interpolation reads within the data; extrapolation extends beyond it and is less reliable. A strong fit describes the past only. (HL only)

4.4 Market research

Why do organizations carry out market research?: To reduce risk before spending, understand customer needs and habits, test a product, price or promotion, measure market size and share, and find trends and gaps.
Primary research methods in the guide: Surveys (wide reach, low response rates), interviews (can probe, but slow), focus groups (reveal why, but dominant voices), observations (show what people do, not why).
Secondary research sources in the guide: Market analyses, academic journals, government publications, media articles and online content. Cheaper and faster than primary, but not designed for your question.
Quantitative vs qualitative research: Quantitative: numerical data (how many, how much), larger samples, easy to compare. Qualitative: opinions and reasons, rich detail, hard to generalize. The type is about data, not method.
Random, quota and convenience sampling: Random: everyone has an equal chance. Quota: fixed numbers from each group in proportion. Convenience: whoever is easiest to reach (least representative).
Quota sample of 40 from customers who are 70% women, 30% men: Quota = group share × total sample: women 0.70 × 40 = 28, men 0.30 × 40 = 12.

4.5 The seven Ps of the marketing mix

Product life cycle: investment, profit and cash flow: Introduction: high investment, likely loss, negative cash. Growth: profit rising, cash often still negative. Maturity: profit highest, cash strongly positive. Decline: profit and cash falling.
The four aspects of branding in the guide: Awareness (recognition), development (image built over time), loyalty (repeat purchase despite alternatives) and value (extra worth that supports price).
Cost-plus, penetration, loss leader, predatory and premium pricing: Penetration: low launch price for share. Loss leader: one item below cost to attract buyers. Predatory: price set to drive rivals out. Premium: high price signalling quality. Cost-plus: unit cost + (unit cost × mark-up %), e.g. 40 + 25% = 50.
Above, below and through the line promotion: Above the line: paid mass media (TV, press, billboards). Below the line: targeted, business-controlled contact (samples, discounts, loyalty cards). Through the line: both together under one message.
People, processes and physical evidence (service marketing): People: staff behaviour shapes the customer experience. Processes: reliable, quick delivery builds loyalty. Physical evidence: premises, uniforms and website are tangible cues for an intangible service.
Dynamic, competitive and contribution pricing; PED: Dynamic: price changes with demand or time. Competitive: set by rivals. Contribution: covers variable cost plus a contribution. PED = % change in quantity ÷ % change in price (+5% price, −2% sales → −0.4, inelastic). (HL only)

4.6 International marketing (HL only)

Opportunities of entering and operating in international markets: A bigger customer base, risk spread across economies, economies of scale, lower costs, longer product life, brand prestige, new ideas, helpful exchange rate moves. (HL only)
Threats of entering and operating in international markets: Culture and language mistakes, exchange rate movements, tariffs and trade barriers, legal differences, strong local rivals, logistics, political instability, higher set-up costs, ethical risk, loss of control. (HL only)
Standardization vs adaptation of the marketing mix: Standardization: the same mix everywhere; lower cost and one global image, but risk of poor local fit. Adaptation: change parts of the mix; better fit but more cost and a possibly mixed image. (HL only)
Landed cost: a USD 20.00 hamper, 10% tariff, USD 3.00 shipping: Tariff 2.00; landed cost = 20.00 + 2.00 + 3.00 = USD 25.00. At USD 1 = EUR 0.90 the euro price is EUR 22.50. (HL only)
EUR 36,000 revenue; the rate moves from USD 1 = EUR 0.90 to EUR 0.80: 36,000 ÷ 0.90 = USD 40,000 before; 36,000 ÷ 0.80 = USD 45,000 after, a 12.5% rise. A weaker home currency helps this exporter. (HL only)