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The Role of Marketing
Ing. Pablo San Andrés
Introduction
People have different needs and wants
Needs.- They are the essential necessities that all
humans must have in order to survive.
Shelter
Water
Food
Introduction
Wants.- They are the desires that humans have.
Irrespective of a person’s income or wealth, it is argued
that we all have infinite wants
http://www.youtube.com/watch?v=el40d2gyWaI
Introduction
Marketing exists to address people’s needs and
wants. It is about making customers want to buy
the products.
It therefore looks at the reasons behind people’s
decision, such as the price, colour, size, or special
features of the product
Introduction
Marketing must serve to meet needs and
wants of the customer. This is essential for all
business aiming to make profit.
Introduction
The marketing department of an organization tends to have 4 main
or generic objectives
1. Ensure that the right products are supplied to fulfill needs and
wants of customers
2. 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.
3. Distribute the products to a place that is convenient for the
customer to make the purchase
4. Ensure that there is an effective promotion to convince
customers to buy from the business
http://www.youtube.com/watch?v=zFENz_nnrq8
The market
A market.- It is a place or process whereby
customers and suppliers trade. A market exists
where there is demand for a particular
product, such as
Textbooks
Flowers
plasma televisions
And where there is a willingness
businesses to supply these products
from
The market
Within any particular market, there is likely to be
a number of rival products and suppliers
that can be used to satisfy the needs and wants of
the customer.
Ex: In luxury consumer clothing industry, the
market consists of competitors such as:
The market
A business will be interested in three elements of
the market in which they operate:
1) The size of the market
2) The growth rate within the market
3) The firm’s share of the market
Market size
It 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.
It can be measured in a number of ways:
1) Customer base
This measures the total potential number of
customers. It can be measured in terms of
volume and value
https://www.youtube.com/watch?v=xqYPBKAh7
Gs
Market size
2) Barriers to entry
These determine the number of suppliers in
the market and can also be a measure of a
market’s size
In markets, such as aircraft manufacturing, the entry
barriers are extremely high ( huge costs, huge
economies of scale, market power)
Market Size
3) Location
Some markets focus on a particular area, country
or region. Ex:
Adidas
is the market leader in the supply of
equipment for Taekwando (a popular form of
martial arts), with around four fifths of the world’s
black belt holders residing in Korea
https://www.youtube.com/watch?v=ug2GYJO9EM8
Market Growth
• It refers to an increase in the size of a market
over a period of time, usually per year.
• This can be measure by an increase in the value
or volume of sales in the market.
• Market growth is likely to lead to more suppliers
entering the market as they are attracted by the
potential profits that can be made
Market Share
• It refers to an organization’s share of the total
value of sales of all products within a specific
market.
Formula:
Market Share
Market Share
Market Share
• There is a positive relationship between market
share and profits.
• Firm with the largest market share is not
necessarily the most profitable.
• Market leaders: They are firms that dominate
the market share in a particular market. For
example: Nike and Adidas are market leaders
in the mass market sports apparel industry
Market Share
A firm with high market share has better pricing
power and is less threatened by competition
How to increase
share?
the
market
• Promotion of brands
• Product development, improvements and
innovation
• Motivation and training of the workforce to
deliver better customer service
• Establishment of property rights through the use
of copyright and patents
• Use of more efficient channels of distribution
Market Share
Market concentration.- It measures the degree
of competition within a market by calculating the
market share of the largest firms in a market.
The sum of these market shares is known as the
concentration ratio
SALES DATA ARE ALSO OLD OR OUT OF
DATE
SO
ANY
MARKET
SHARE
INFORMATION
WILL
REPRESENT
A
HISTORICAL
SITUATION
AND
NOT
NECESSARILY THE CURRENT POSITION.
Exercise No. 1
Answer
Exercise No. 2
Answer
Exercise No. 3
Exercise No. 4
Nokia is the world’s largest mobile phone producer, with
approximately 35% market share. Nokia’s market share is
double that of its nearest rival, Motorola. Sales of Nokia
handsets have soared recently mainly due to rising
demand in India, China and Eastern European markets
a) Calculate the approximate two-firm concentration
ratio in the mobile phone industry
b) Outline what is meant by market share and show how
it might be calculated
c) Explain two advantages that Nokia might enjoy by
having a larger market share than its rivals such as
Motorola
Answer
Answer
Definition
Marketing
and
nature
of
Marketing.- The management role of predicting,
identifying and meeting the needs and wants of
customers in a profitable manner.
Ex: The movie industry is constantly trying to
produce films that audiences may want to see
http://www.youtube.com/watch?v=D3ppkRUEt4w
Definition and nature of Marketing
• Marketing seeks to satisfy the consumer
• Products must satisfy the consumer’s need and
want
• Products must represent value for money
• Price, availability and quality are essential
elements that consumers consider when
assessing value for money = Loyal customers
Definition and Nature of Marketing
• Professor Philip Kotler argues that customers
will buy products from the firm that offers the
highest value for money (what he called
customer delivered value). This is the
difference between benefits and costs to
the customer purchasing the product.
Definition and Nature of Marketing
Marketing alone does not ensure success since
other aspects the business must also consider,
such as:
Operations management
• The production department will work closely
with the marketing people in using sales
forecasts (from market research) to prepare
their production schedules.
Definition and Nature of Marketing
• The work together to research, develop and
launch products to meet the needs of customers
• There may be some conflict between them
since production managers would prefer a
longer time period in which to test and
develop
products
whereas
marketing
managers would urge for a quick launch in
order to maximize sales revenues
Definition and Nature of Marketing
Finance
• The marketing department will work closely
with the finance department in order to set
appropriate budgets.
• Conflict: It is likely that finance department
would want prices to cover costs of production in
order to generate profits, but marketers may feel
that low prices (that do not necessarily cover all
costs) are necessary in the short term to get
foothold in the market
Definition and Nature of Marketing
Conflict: Marketers may also want to use
extended credit facilities (such as interest freecredit instalment plans) to entice customers, but
finance department will be conscious of the act
that extended credit can lead to all sorts of
liquidity problems.
Definition and Nature of Marketing
Human resource management
Marketing data can help the HRM department to
identify staffing needs.
For example: The introduction of a new product
may require recruiting extra production staff (The
right quantity and quality of workers) in order to
meet needs of their customers.
Market and product orientation
Product orientation
It is a marketing approach adopted by business
that are inward looking. They focus on selling
products that they make, rather than making
products that they can sell.
Ex: Many hi-tech products that are used in daily
life were created using a product orientation
approach
Market and product orientation
Market orientation
It is also known as consumer orientation. It is a
marketing approach adopted by business that are
outward looking. They focus on making products
that they can sell, rather than selling products that
they can make.
Market and product orientation
Market orientation
Advantages
* Flexibility.- Able to anticipate changes in the
market (access relevant data and information).
* Less risk.- Firms can be confident that their
products will sell and be successful
Disadvantage
* Market research tends to be very expensive
Market and product orientation
Marketing of goods and services
Service: It is an intangible product
Bank service: Tax-free savings, overdrafts,
or mortgages
Services are heterogeneous (Customers gets a different experience)
Marketing of goods and services
Traditional marketing mix of goods
Marketing of goods and services
The marketing of
additional elements
services
includes
three
The Marketing
services
of
goods
and
People
The provision of services relies on the goodwill of
all employees.
The marketing
services
of
goods
and
The effectiveness of people in delivering a service
may be measured in a number of ways
• Appearance and body language
McDonald’s have a ‘Smiles are free” policy to ensure that
their customers are greeted with a friendly smile.
The marketing
services
of
goods
and
• Aptitudes and attitudes
Managers will ask a range of questions concerning the
capability and behavior of their staff.
Ex:
_ Proactive
_ Attentive to the needs of their clients
_ If they are caring, courteous and confident
The marketing
services
of
goods
and
Feedback
Comments made by various stakeholder groups
can also provide useful information regarding the
effectiveness of people in delivering good
customer service.
The Marketing
services
of
goods
and
• Efficiency
Staff who do not keep customers waiting and who
do not make mistakes will help the business to
gain a better reputation of reliability.
The Marketing
services
of
goods
and
Processes
Process refers to the way in which a service is
provided or delivered. It includes:
• Payment methods (cash, cheque or credit card).
This makes the process more convenient for
customers
• Waiting time (poor image)
• Customer service (attentiveness and politeness
of staff towards customers)
• After sales care (maintenance, guarantees and
warranties)
The Marketing
services
of
goods
and
Physical evidence (or physical environment)
The physical environment refers to the tangible aspects of a
service. For example: 5 Star Hotel because we might expect
to see a clean lobby with nice décor and well-groomed hotel
staff.
The Marketing
services
of
goods
and
Challenges facing managers in delivering quality
customer services include:
1) Correcting mistakes
2) Measure productivity (Service is difficult to measure)
3) People management (The lack of motivation from
just one worker, could be enough to tarnish the
reputation of the business)
It difficult to measure the
productivity of her students
Marketing in non-profit organizations
Non-profit organizations don´t make an effort to
make profits. Such as:
• Charities
• Religious organizations
• Government department
Some governments use television
advertisements to persuade drivers
not to drink and drive
Marketing in non-profit organizations
They tend to use SOCIAL MARKETING
STRATEGIES rather than market-led estrategies
used by profit-seeking organization
Governments are also adopting social marketing
techniques to encourage recycling and protection of
the environment
Marketing in non-profit Organizations
Strategies:
1) Slogans
2) De-marketing
Marketing in non-profit Organizations
Strategies:
3) Internet tecnologies
Newsletters are published online and there
may be facilities to make online donations
4)
Public relations (such as fund-raising
events)
Elements of a Marketing Plan
Marketing Plan: It is a document outlining a
firm’s marketing objectives and the marketing
strategies to be used in order to achieve these
objectives.
Marketing Plan
1) SMART
marketing
objectives
(specific,
measurable, agreed, realistic and time constrained)
2) Methods of market research to be used to
identifying target markets
3) An assessment of strengths and weaknesses of
competitors
4) Marketing Mix
5) Details of the marketing budget
6) SWOT and Pest analysis (To assess internal and
external factors affecting the business and its
marketing objectives)
Wallington High School for Girls
Wallington High School for Girls, located in
Surrey (UK) is a selective grammar school for
girls. Selection is based on an academic entrance
exam. There are several other selective and private
fee-paying schools in the UK. Like all schools,
Wallington High School for Girls is involved in
marketing. Each year, the management team of
the school will deliberately run events to market
their organization. These events include: parents’
information evenings, charity events, celebration
evening, music concerts and drama productions.
Wallington High School for girls
Wallington High School for girls gained its
Engineering Status in 2004 (which gives it extra
funding from the government) and proudly
markets this achievement. The school also
communicates its outstanding examination results
to all key stakeholders.
1) Explain two reasons why marketing is
important to Wallington High School
2) Analyze how people, process and physical
evidence are vital elements of the marketing
mix in the marketing of schools