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Starter What is marketing? Task: In pairs, mind map what you think marketing involves. ? ? Marketing ? ? Objectives To understand the concept of Marketing To understand and identify marketing objectives To apply marketing objectives to a given businesses Marketing Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitability. Chartered Institute of Marketing (CIM) definition It is about more than just advertising Marketing involves a range of activities including: – Market research – Setting prices – Designing and using promotion methods, including advertising – Designing the product and packaging – Deciding where to sell the goods/services – Managing distribution channels – Customer service and communicating with customers 3 – The method of selling the good/service Purposes of marketing As described in the definition, marketing has three main purposes: 1. Anticipating consumers’ wants 2. Satisfying customers’ wants 3. Meeting the needs of the business 4 The value of setting marketing objectives Businesses must set marketing objectives to determine what they must do in their marketing strategy to help achieve their overall company objectives. Marketing objectives: The specific goals/targets of the marketing department. They must be in line with the firm’s overall corporate objectives. Discuss potential examples of marketing objectives a firm may set. Increase sales volume and sales value Brand image and awareness Market and sales growth Increase market share Build brand loyalty 5 What are the similarities and differences between these 2 markets? What do you think are the marketing objectives of these two businesses? Marketing Objectives Marketing objectives are likely to be informed by research and potentially constrained by budgets They will be used to select the marketing strategy and develop a marketing plan Marketing objectives may focus on: Sales volume and value Market size Market and sales growth Market share Brand loyalty Marketing objectives Would it be possible for a business to set an objective to increase sales value whilst reducing sales volume? Sales volume and sales value Sales volume is the amount of sales expressed as a number of units sold e.g. 20 tonnes of wool Sales value is the amount of sales expressed as the total sum of money spent by consumers e.g. £3 million expenditure on clothing With reference to the supermarket and retail industries explain what is meant by the terms sales volume and sales value. Marketing objectives Market size is the total sales value or sales volume in a given market Market size can be calculated as: Number of units sold x price e.g. If there are 2 million cars sold at an average price of £15 000 then the market size is (2 million x £15 000) £30 billion Marketing objectives Market and sales growth is the percentage increase in the size of the market by value or volume over a period of time Growth can be calculated as: Change in size of market/original size x100 e.g. If the fashion market grows from £30 billion to £33 billion it has grown by (£3 billion /£30 billion) x 100) 10% What is the growth in the automotive industry forecast to be between 2012 and 2017? Marketing objectives Market share is the proportion of total market sales that a firm has Market share can be calculated as: Business A sales/market sales x 100 Analyse the benefits to a firm such as Facebook of increasing market share. Why might any business set an objective of maintaining or increasing market share? Marketing objectives Brand loyalty exists when customers keep returning to buy a recognised brand Branding is a promotional method that involves the creation of an identity for a business that distinguishes it and its products from competitors In pairs Mondelez wins with share bags but Mars suffers after downsizing Prepare a short presentation about the confectionery market Show your understanding of all the terminology covered under marketing objectives Activity EasyGym is run in the same way as EasyJet. Customers are offered a very basic, low-cost service at a very low price. EasyGym is an example of how much an organisation’s corporate aims can limit its scope for marketing strategies. Its philosophy is based on minimising costs through eliminating unnecessary expenditure. This allows the firm to charge low prices to customers. Marketing costs must also be minimised. Ryanair and Primark are companies that operate on a similar philosophy. 1. 2. Select two marketing objectives that you believe would be unsuitable for budget companies such as Easy jet/Ryanair. Explain why you believe this. Select three marketing objectives that you believe would be suitable for budget companies such as Easy jet/Ryanair. Explain why you believe this. Internal Influences on Marketing objectives Why would a business want to plot marketing expenditure against sales? What would you expect the correlation to be? Finance Marketing budget Cash flow targets Timing and quantity of sales Return on investment targets Revenue is generated through marketing activities HR Will marketing activities lead to more customers? Are staff trained to respond to marketing activities? Keeping staff informed Internal Influences on Marketing objectives Why is it important for the marketing function to understand capacity utilisation? Operational issues Ability to meet demand Little point in generating increased demand if stocks are not available Implementation of marketing decisions Ability to physically produce a new or changed product Logistics of a new market Distribution and stock issues Corporate objectives Always the driving force behind other functional objectives External Influences on Marketing objectives Competitors’ actions Marketing budget Promotional activities Pricing policies Product development Aggressive marketing Market factors Degree and relative power of competitors Social factors Legislation Demographics External Influences on Marketing objectives Technological change How have ethical and environmental influences impacted on the marketing objectives of Nestle? E commerce Digital marketing Social media Global markets Production capabilities Ethical and environmental influences Consumers’ expectations Pressure groups Marketing objectives: Group activity In pairs you must decide on a new company. Some ideas could include, a T-shirt or clothes brand, mobile phone and tablet or PC firm, drinks company, etc. Group tasks: 1. Decide on a brand name and company type. 2. Who would your main rivals be? 3. Decide who the target audience would be and why 4. What would your marketing objectives be? Set at least 5. 5. What marketing methods would you use to reach and appeal to your target audience and establish brand loyalty? Research task: Research online the cost of retaining customers compared with attracting new customers.