Download and Marketing

+
Unit 4.1 The Role of
Marketing
+
Marketing
 Marketing
is essential to the success of any
business. However, marketing is not just
about selling or advertising, as many
people think.
 Marketing
exists to address people’s needs
and wants.
 It
is about making customers want to buy
the products of a particular business.
+ “Marketing is the management process
involved in identifying, anticipating and
satisfying consumer needs profitably.”
– The Chartered Institute of Markerting
“Marketing
is the activity, set of
institutions, and processes for creating,
communicating, delivering, and
exchanging offerings that have value
for customers, clients, partners, and
society at large.” – American Marketing
Association
 “Marketing
is meeting the needs of your
customer at a profit.” – Kotler (1994)
+
Marketing is not simply:
 Selling
 Advertising
 Public
relations
 Promotion
 Smooth-talking
salespeople
 Glossy,‘jazzy’
media coverage
 The
spending of vast amounts of money
However
Marketing
is:
+
A strategy or a plan for successful business
An overall focus on the customer
A total approach to running an organization
and building up business
The involvement and combination of
sometimes simple, occasionally complex
decisions into effective action
Looking outside the organization for the
primary direction
Dynamic
+
4 main objectives of marketing
 Ensure
that the right products are supplied
to fulfill the needs and wants of customers.
 Set
the correct price so that customers can
afford to buy the product (and to ensure
that they do not buy from a rival business).
 Distribute
the products to a place that is
convenient for the customer to buy the
products.
 Ensure
that there is adequate and effective
promotion to convince customers to buy
from the business.
+
4 P’s of MARKETING
+
7 Ps of marketing (4 + 3)
 These
are marketing of services:
 People
 Process
 Physical
Evidence
+
PEOPLE:
Effectiveness
can be
measured in a number of
ways:
 Appearance
and body language (use of uniform
and formal clothing)
 Aptitudes and attitudes (capability and behavior)
 Feedback from various stakeholder groups
provide useful information regarding the
effectiveness in delivering good customer
service
 Efficiency to gain better reputation and
corporate image
+
PROCESSES:

Refers to the way in which a service is
provided or delivered; it includes:
 Payment methods (cash, check, etc.)
 Waiting time (queuing time)
 Customer service refers to degree of
attentiveness, care and politeness of staff
toward their customers.
 After-sales care are services offered
following the sale of the product
(installation, maintenance, tech support,
warranties)
+
PHYSICAL EVIDENCE
(ENVIRONMENT)
Refers
to tangible aspects of a
service
Many
businesses use
peripheral products
(additional products) to
enhance the overall
experience for customers
+
Relationship of Marketing with
other Business Functions
 Finance
and Marketing
 Both departments must work together in setting
the appropriate budgets.
 The marketing dept. may want to spend more
than is in its budget to meet the requirements of a
demanding marketing plan, but the finance dept.
may advise that it sticks to its given budgetary
allocations.
 This will cause a department conflict.
+
Relationship of Marketing with
other Business Functions
 Human
Resource Management (HRM) and
Marketing
 Marketing information can enable more effective
workforce planning in the HRM department.
 This can influence the demand and supply of
labor in an organization.
 Ensuring that the right quality of salespeople are
hired – those with innovative minds and a
competitive spirit – will also aid in meeting the
marketing department’s objectives.
+
Relationship of Marketing with
other Business Functions
 Operations
Management and Marketing
 Production and marketing depts. will need to
work together to ensure that the products
developed meet the specifications of the
customers.
 Market research will help the marketers in
determining the needs and wants of the
consumers.
 Both departments need to balance the time
needed to test, develop, and launch products, to
avoid any loss in sales or reputation and any
arousal of potential stakeholder conflict.
+
Marketing Goods and Services
GOODS
SERVICES

Are tangible (can be touched)

Are intangible (cannot be
touched)

Can be returned if you did not
like what you bought

Cannot be taken back (ex. a bad
haircut)

Can be stored and consumed
later

Cannot be stored and will need
to be consumed immediately
(ex. your consultant’s time)

There is ownership of the
product

There is no ownership of the
product

Services are more difficult to
compare because of different
experiences a customer may get
from a given service (ex. A hotel
may treat a customer differently
each time he/she visits)

Goods are easier to compare
because of the similar nature
of some products (ex. One TV
can easily be compared to
another)
+
Marketing must consider these
characteristics between goods and services

Intangibility

Inseparability

Heterogeneity

Perishability

Product strategy

Price strategy

Promotional strategy

Place strategy
Theory of Knowledge
Is it more difficult to
market a good or a
service?
There are two distinct
approaches that businesses
can use to market their
products.
+
Product-Oriented Approach
Or
Market-Oriented Approach
+
Product Orientation vs.
Market (Consumer) Orientation
Product Orientation

Adopted by businesses that
are inward looking.

They focus on selling
products that they make,
rather than making products
that they can sell. They focus
on making the product first
and then trying to sell it.


They supply the products
and tempt the customers to
buy them.
Market Orientation

Adopted by businesses that are
outward looking.

They focus on making products
that they can sell, rather than
selling products that they can
make. They focus on carrying out
market research first and then
making products that can sell.

They supply products that meet
consumer needs and wants.

Ex. Ford, Sony, Samsung
Ex. Microsoft, Ferrari, Apple
+
Advantages
Product Orientation

Quality can be assured –
they supply products that
they have expertise in

Customers are willing to
pay higher price for
exclusivity and luxury
products
Market Orientation

Flexibility – firms can
respond quicker to
changes in the market as
they have access to
relevant data and
information

Less risk – firms can be
more confident that their
products will sell and be
more successful
+
Disadvantages
Product Orientation

Inward looking because
they assume that they know
what the consumers want

Very risky – needs of the
market are ignored such as
changes in fashion and
tastes

High failure rate

Money spent on R&D
without taking the customer
in consideration is fruitless
Market Orientation

Market research tends to
be very expensive

Given the dynamic nature
of the business
environment and the
uncertainty of the future,
there is no guarantee that
this approach will work
Question 4.1.1
Sony
Page 331
Types of marketing
strategies
+
Commercial Marketing
And
Social Marketing
+
Commercial Marketing

This involves creating, developing, and exchanging goods or
services that customers need and want.

Market research is carried out to establish customer demand
and businesses will supply what is demanded.

It is considered value-free and does not involve making
moral judgments on the buying habits of customers.

Strategies may include a traditional focus (using billboards,
television advertisements or local print media) or an online
marketing campaign (using Google Ad or emails). Or mass
marketing campaign.
+
Social Marketing

Involves use of marketing approaches that help bring
about changes in behavior that ultimately benefit
society.

“The use of commercial marketing concepts and tools in
programmes designed to influence individuals’ behavior
to improve their well-being and that of society” – The
Social Marketing Institute (SMI)

Ensures that businesses make good marketing
decisions based not only on consumers’ wants and the
firm’s requirements but also on consumers’ and
society’s long-term interests and welfare.

Examples: Public health campaigns (anti smoking
campaigns)
+
Advantages of Social Marketing
 It
gives firms a competitive advantage as
consumers may perceive such firms to be socially
responsible and therefore buy products from them.
 Firms
can charge premium prices for providing
goods that society is deriving benefits from.
However, getting people to change their habitual
behavior poses a major challenge to social marketers.
As a result, a number of non-profit organizations
(NPOs) have set up in an effort to help people change
their behavior, for example Alcoholic Anonymous
(AA).
+
COMMERCIAL MKTG
 Selling
physical goods
and intangible
services for a profit
 Exists
to satisfy
individual needs and
wants, and thus reaps
profit for the business
 Is
used mainly by
private sector business
SOCIAL MKTG
 Aims
to influence or
persuade a desired
change in social
behavior or attitudes
 If
successful, satisfies
the needs and desires
of the general public,
and thus reaps
benefits for
communities
 Is
used mainly by the
government and nongovernmental
organizations (NGOs)
Question 4.1.2
Singapore’s Littering Policy
Page 333
MARKET
+
+
THE MARKET
A
market is a place or process whereby customers
and suppliers trade.
 It
exists where there is demand for a particular
product and where there is willingness from
businesses to supply these products.
 Markets
that cater for private individuals (i.e.
general public) are known as consumer markets.
 Markets
that cater for organizations (businesses
and government) are known as industrial
markets or commercial markets.
+ 4 Market Structures
+
Market Characteristics
 Market
Size
 Customer
 Barriers
Base
to Entry
 Competition
 Geographic
 Demographic
 Market
Growth Rate
 Season
and Cyclical
+
Market Size
 Markets
differ in their size as measured by sales
revenue.
 International
and globalization have meant that the
size of a market is not confined to the domestic
market.

Market size is a measurement of the total volume of a
given market. For now, think of market size in terms of a pie
chart (think of a circle). The entirety of the circle represents
the market size.
+
Customer Base
 Alternative
measure of market size, this refers to
the total potential number of customers in a
particular market.
 Multinational
companies have been expanding
into China and India partly because they account
for the third of the world’s population.
 The
internet has also broadened the customer
base for many businesses.
+
Barriers to Entry
 These
are obstacles that determine the
number of suppliers in the market.
 In
markets such as oil and aircraft
manufacturing, the entry barriers are
extremely high as there are huge set-up
costs and existing firms already dominate
with their market power and huge
economies of scale.
 In
other markets where entry barriers are
relatively low, there are a lot more
businesses that operate on a much smaller
scale.
+
Competition
 This
refers to the degree of rivalry within a
particular market.
 The
market for soft drinks, sports apparel or
aircraft manufacturing is dominated by only
a small number of producers. As firms have
significant market power, the intensity of
competition can be very high in such
markets.
+
Geographic
 Some
markets focus on a particular area,
country or region.
 Ex. Adidas
is a market leader in the supply
of equipment for Taekwondo with around
4/5 of the world’s black belt holders
residing in Korea.
 Ex. One
billion vegetarians who reside in
India.
 Ex. Other
markets
target a global audience.
+
Demographic
 Characteristics
of
consumers include
differences in gender,
age, ethnicity and
religion.
 Marketers
can then
target their
promotional strategies
toward these
demographic groups.
 Ex. Market
for Porsche
cars comprises mainly
of mails aged 35 and
above who earn higher
than average incomes.
+
Market Growth Rate
 Refers
to an increase in the size of a market
per period of time, usually a year.
 It
can be measured by an increase in value
or volume of sales in the market.
 Usually
expressed in percentage change to
indicate the extent of market growth.
 Ex. Market
rises from $100 to $110 = 10%
growth.
 Market
growth is likely to lead to more
suppliers enter the market as they are
attracted to the potential profit.
+
Seasonal and Cyclical
 Seasonal
is any change or pattern that
recurs or repeats over a one-year period.
 Cyclical
effects can span time periods
shorter or longer than one calendar year.
 Some
markets are constrained by seasonal
factors (ie. weather).
+
MARKET SHARE
 Refers
to an organization’s share of the total
value of sales within a specific market.
 Mkt. Share
= Firm’s sales revenue x 100
Industry’s sales revenue
 An
increase in market share shows that the
marketing strategy is successful against that
of competitors.
 The
firm with the highest market share is
called the ‘BRAND LEADER’.
+
Increase in market share might be
done in a number of ways:
 The
promotion of their brands
 Product
development, improvements and
innovation
 Motivation
and training of the workforce to deliver
better customer service
 Establishing
property rights through the use of
copyright and patents
 Use
of more efficient channels of distribution
+ Market Concentration &
Concentration Ratio
 Market
concentration measures the degree of
competition that exists within a market by
calculating the market share of the largest firms in
the industry.
 The
sum of these market shares is known as the
concentration ratio.
 For
example, an industry with a 3-firm
concentration ratio of 98% means that the top 3
firms account 98% of the industry’s output. Hence,
this would not be a very competitive industry as all
other firms would account for just 2% of the total
sales of the market.
Question 4.1.3
Samsung
Page 335
Marketing Objectives
+ - are the specific goals of
an organization.
+ Marketing Objectives of For-Profit
Organizations
Increased
By
sales revenue:
increasing the customer base
and/or persuading existing
customers to buy more, the business
can generate greater sales revenue.
+ Marketing Objectives of For-Profit
Organizations
Higher
It
Market Share:
suggests that the business is more
competitive than its rivals, who might
also have generated higher sales
revenue but at a slower rate of
growth.
+ Marketing Objectives of For-Profit
Organizations
Increased
While
Market Leadership:
market share might be higher,
market leadership means the
business enjoys the benefits of
having the largest market share in
the industry.
+ Marketing Objectives of For-Profit
Organizations
Improved
Product and Brand
Awareness:
Marketing
can help a business to
promote its products and brands in
order to gain brand awareness and
customer loyalty.
+ Marketing Objectives of For-Profit
Organizations
Developing
Innovation
New Products:
and new products can
give businesses a competitive edge
over their rivals.
+ Marketing Objectives of For-Profit
Organizations
Enhanced
Brand Perception
(Product Positioning):
Existing
and potential customers
have a positive perception (opinion
or judgment) about the business.
Objectives of Social
Marketing
+
+
Objectives of Social Marketing
 To
build membership (support) and to
connect with new donors
 To
generate awareness of the NPO’s cause
 To
improve brand recognition of the NPO
 To
create positive attention to the NPO’s
operations
 To
demonstrate the value of the NPO to the
local community or society in general
Question 4.1.4
FC Barcelona
Page 337
Marketing Strategies
and Changes in
Customer Preferences
+
+
Reasons why marketing strategies
evolve:
 Changing
-
-
customer tastes
As consumer tastes are constantly subject to change,
marketers must constantly evolve their marketing
strategies to remain competitive.
Example: The traditional Bollywood movie had 3 key
components
- (1) it had to be long (Indians want value for their money)
- (2) there had to be songs and dancing
- (3) had to be a happy ending
However, due to globalization, Bollywood movie producers
have changed this formula to cater for their international
customer base.
+
Reasons why marketing strategies
evolve:
 Shorter
product life cycle
• Marketers use different
strategies at different stages of
a product’s life cycle.
• If successful, sales are strong
during the introduction and
growth stages.
• Extension strategies may be
used (Unit 4.5) to prevent
sales from declining when the
market becomes saturated.
• Too much competition means
that the product cycle has
shortened.
+
Reasons why marketing strategies
evolve:
 Internet
and Mobile Technologies
• The e-commerce
revolution has also
meant that consumers
have far more choice
than ever before.
• Businesses that have
an online presence
are better positioned
to meet the needs of
their customers.
+
Reasons why marketing strategies
evolve:
 Competitive
Rivalry
• The intensity of competition in many markets
across the world has forced marketers to adapt
and evolve their strategies.
• Competitors may initiate marketing strategies
that threaten the profitability or survival of
their rivals.
• Ex. Apple and Samsung’s innovative products
and aggressive marketing strategies led to the
eventual collapse of Motorola, Nokia and SonyEricsson in the mobile phone industry.
• Evolving marketing strategies can be seen as a
defensive strategy against competitors that
pose a threat to the organization’s market share
and market position.
+
Reasons why marketing strategies
evolve:
 Globalization
• Globalization has made businesses and countries more
interdependent with consumer tastes more integrated.
• This forced marketers to act globally.
• Ex. China has become the world’s largest consumer market for many
products, including televisions, cars, refrigerators and air
conditioners. This has meant that marketers evolve their strategies to
match the local needs and wants of Chinese consumers.
+
The role of marketing and
the CUEGIS concepts
Pages 339 - 342
Question 4.1.5
Banning Pester Power
Page 340
Question 4.1.6
Nestle offensive advertising: a
strategy:
Page 341
REVIEW TERMS
Commercial Marketing
• Is the use of marketing strategies to
meet the needs and wants of
customers in a profitable way.
Ethical code of practice
• Refers to guidelines that help
businesses to act in a moral way by
considering what is ethically right or
wrong (from society’s point of view).
Market
• A place or process whereby
customers and suppliers trade. A
market exists where there is demand
for a particular product and where
there is a willingness from businesses
to supply these products.
Market Concentration
• Measures the degree of competition
that exists within a market by
calculating the market share of the
largest few firms in the industry.
Market Leadership
• Refers to firms with the largest
market share in a particular market.
Market Orientation
• Is a marketing approach adopted by
businesses that are outward looking
by focusing on making products that
they can sell, rather than selling
products that they can make.
Market Share
• Measures the value of a firm’s sales
revenues as a percentage of the total
sales revenue in the industry.
Market Size
• Refers to the magnitude of an
industry, usually measured in terms
of the value of sales revenue from all
the businesses in a particular market,
per time period.
Marketing
• Is the management process of
predicting, identifying and meeting
the needs and wants of customers in
a profitable manner.
Marketing Objectives
• Are the specific marketing goals of
an organization. The marketing
objectives of for-profit (profitseeking) organizations include
increased sales revenue, market
leadership and greater market share.
Marketing Strategies
• Are the medium to long term plan to
achieve a firm’s marketing
objectives.
Needs
• Are the essential necessities that
humans must have to survive.
• Example: food, shelter, warmth and
water
Product Orientation
• Is a marketing approach used by
businesses that are inward looking as
they focus on selling products that
they can make, rather than making
products that they can sell.
Social Marketing
• Refers to any activity that seeks to
influence social behavior to benefit
the target audience and society as a
whole.
Wants
• Are human desires. Irrespective of a
person’s income or wealth, all people
have infinite wants.