4 · Marketing decisions

IB Diploma Programme Business Management SL, Unit 4 Marketing (first assessment 2024). This topic covers the SL content of sections 4.1 to 4.6: the role of marketing, marketing planning, market research and the seven Ps of the marketing mix. Sales forecasting (4.3) and international marketing (4.6) are HL only and are left out. The worked examples use the course's repair business. Its city has a market of 8,000 car repairs a month, and the business does 2,000 of them.

Luckin Coffee opened its first shop in Beijing in 2017. Within two years it had more shops in China than Starbucks. It did not win with better coffee alone. It used an app for every order, small pick-up shops instead of big cafés, and large discounts to win first-time buyers. Every one of those choices is a marketing decision: product, price, place and promotion. This topic shows how a business decides who its customers are and how to reach them.

Must-know for this topic:

Marketing 营销 means finding out what customers want and supplying it at a profit. It links the business to its customers.

• A business with market orientation 市场导向 starts with customers: it researches what they want, then makes it. This is the usual approach today, because tastes change fast.
• A business with product orientation 产品导向 starts with the product: it makes what it is good at, then tries to sell it. This can work for new technology, where customers do not yet know what they want, but it is risky.

Social enterprises market too, but their aim may be to change behaviour (for example, to make people recycle) rather than to earn profit.

Market share 市场份额 is a firm's sales as a percentage of the whole market's sales.

Worked example. The city's garages do 8,000 repairs a month, and the repair business does 2,000. Its market share $= 2{,}000 \div 8{,}000 \times 100 = 25\%$. If the market grows to 10,000 repairs and the business does 2,400, its sales rise by 20% but its market share falls to 24%. Rivals grew faster.

A high market share brings economies of scale, a strong brand and power over suppliers. The firm with the largest share is the market leader 市场领导者.

A marketing plan 营销计划 sets out the marketing objectives, the target market, the marketing mix, the budget and how success will be measured. Marketing objectives must fit the business's main objectives: for example, "raise market share from 25% to 30% in two years".

Segmentation, targeting and positioning

1. Segmentation 市场细分: dividing a market into groups of customers with similar needs. Common ways: by demographics 人口统计特征 (age, income, gender), by geography, and by psychographics 消费心理特征 (lifestyle, values, interests).
2. Targeting 目标市场选择: choosing which segments to serve. A niche market 利基市场 is a small, specialised segment; a mass market 大众市场 is a large one with similar needs.
3. Positioning 市场定位: deciding how the product should be seen compared with rivals in the customer's mind.

A position map 定位图 (perception map) places rival products on two features that customers care about, such as price and quality. It shows where competition is crowded and where there is a gap.

A gap is not always a chance: there may be no customers there, or it may cost too much to serve. A business stands out through its unique selling point 独特卖点 (USP): something rivals do not offer. The repair business's USP is a 24-hour repair promise with a free replacement car.

The Ansoff matrix 安索夫矩阵 (from the business management toolkit) shows four growth strategies and their risk:

Market research 市场调研 collects information about customers, competitors and markets to reduce the risk of decisions.

• Primary research 一手调研 collects new data for the business's own purpose: surveys 问卷调查, interviews, focus groups 焦点小组 (a small group discussing a product), observation and test marketing. It fits the question exactly and is up to date, but it is slow and costly.
• Secondary research 二手调研 uses data that already exists: government statistics, industry reports, newspapers, competitors' websites and the firm's own sales records. It is quick and cheap, but it may be out of date or collected for another purpose.

Quantitative data 定量数据 is numbers ("62% of drivers service their car once a year"). Qualitative data 定性数据 is opinions and reasons ("drivers distrust garages that do not explain the fault"). Good research uses both.

Researchers usually ask a sample 样本 instead of everyone:

Sampling error 抽样误差 happens when the sample does not represent the population, often because it is too small. Research can also be biased by leading questions. And collecting customer data online raises ethical questions about privacy and consent.

The marketing mix 营销组合 is the set of decisions a business makes to sell its product. For goods there are four Ps: product, price, promotion and place. Services add three more: people, processes and physical evidence. All seven must fit together: a premium brand with a very low price confuses customers.

Product

The product life cycle 产品生命周期 shows the stages of a product's sales over time:

Extension strategies 延伸策略 delay the decline: a new feature, a new design, a new market, or a new use.

The Boston Consulting Group matrix 波士顿矩阵 (BCG matrix) looks at a firm's whole range of products, its product portfolio 产品组合, using market growth and relative market share:

• Stars 明星产品: high share of a fast-growing market. They need cash to keep growing. EV battery servicing.
• Cash cows 现金牛: high share of a slow-growing market. They earn more cash than they need. Ordinary car repairs.
• Question marks 问题产品: low share of a fast-growing market. Invest to build share, or drop them. The new repair booking app.
• Dogs 瘦狗产品: low share of a slow-growing market. Usually sold or closed. Tyre sales, where large chains are much cheaper.

A balanced portfolio uses the cash from cows to turn question marks into stars, which later become the next cash cows.

Branding 品牌建设 gives a product a name, logo and identity. A strong brand builds brand loyalty 品牌忠诚度 and lets the firm charge more. Packaging protects the product, but also informs and attracts buyers.

Price

Promotion

• Above-the-line promotion 线上促销 uses paid mass media: television, newspapers, cinema, billboards and online adverts. It reaches many people, but it is costly and hard to target.
• Below-the-line promotion 线下促销 is targeted and often cheaper: sales promotions (discounts, free gifts), sponsorship, direct marketing, personal selling and public relations 公共关系 (PR).
• Social media marketing 社交媒体营销 uses platforms such as WeChat, Douyin and Instagram. It is cheap and two-way, and messages can go viral, but bad comments spread just as fast.
• Guerrilla marketing 游击营销 uses surprising, low-cost stunts in public places to get attention.

The promotional mix 促销组合 is the combination a business chooses.

Place

Place 渠道 is how the product reaches the customer. A distribution channel 分销渠道 is the path from producer to consumer.

Each intermediary 中间商 (wholesaler, retailer or agent) adds reach and convenience, but takes part of the profit and reduces the producer's control. Selling online (e-commerce 电子商务) lets even small firms sell directly to customers far away.

People, processes and physical evidence

• People 人员: the staff who deal with customers. In a service, the mechanic who explains a fault clearly is part of the product.
• Processes 流程: how the service is delivered: online booking, waiting times, how complaints are handled.
• Physical evidence 有形展示: what customers can see: a clean workshop, uniforms, a clear invoice, online reviews.

• Marketing; market against product orientation; marketing in social enterprises; market share $2{,}000 \div 8{,}000 = 25\%$ and why share can fall as sales rise; market leadership (4.1).
• The marketing plan; segmentation by demographics, geography and psychographics; targeting niche and mass markets; positioning, position maps and the USP; the Ansoff matrix (4.2).
• Primary and secondary research; qualitative and quantitative data; random, stratified, quota, convenience and snowball sampling; sampling error and ethics (4.4).
• The seven Ps: the product life cycle and extension strategies; the BCG matrix with stars, cash cows, question marks and dogs; branding; the nine pricing methods; above- and below-the-line, social media and guerrilla promotion; distribution channels and intermediaries; people, processes and physical evidence (4.5).