+
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.
Itis 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.
Setthe 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:
Effectivenesscan 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 Cannot be taken back (ex. a bad
what you bought haircut)
Can be stored and consumed later Cannot be stored and will need to
be consumed immediately (ex.
There is ownership of the product your consultant’s time)
Goods are easier to compare There is no ownership of the
because of the similar nature of product
some products (ex. One TV can
easily be compared to another) 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)
+ 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 Market Orientation
Adopted by businesses that are Adopted by businesses that are outward
inward looking. looking.
They focus on selling products that They focus on making products that
they make, rather than making
they can sell, rather than selling
products that they can sell. They
focus on making the product first products that they can make. They
and then trying to sell it. focus on carrying out market research
first and then making products that can
They supply the products and sell.
tempt the customers to buy them.
They supply products that meet
Ex. Microsoft, Ferrari, Apple
consumer needs and wants.
Ex. Ford, Sony, Samsung
+
Advantages
Product Orientation Market Orientation
Quality can be assured – they Flexibility – firms can respond
supply products that they have quicker to changes in the
expertise in market as they have access to
relevant data and information
Customers are willing to pay
higher price for exclusivity and Less risk – firms can be more
luxury products confident that their products
will sell and be more
successful
+
Disadvantages
Product Orientation Market Orientation
Inward looking because they Market research tends to be
assume that they know what very expensive
the consumers want
Given the dynamic nature of
Very risky – needs of the the business environment and
market are ignored such as the uncertainty of the future,
changes in fashion and tastes there is no guarantee that this
approach will work
High failure rate
Money spent on R&D without
taking the customer in
consideration is fruitless
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
Itgives 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 SOCIAL MKTG
Selling physical goods Aims to influence or
and intangible services for persuade a desired change
a profit in social behavior or
attitudes
Ifsuccessful, satisfies the
Exists to satisfy needs and desires of the
individual needs and general public, and thus
wants, and thus reaps reaps benefits for
profit for the business communities
Isused mainly by private Isused mainly by the
sector business government and non-
governmental
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.
Itexists 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.
Marketsthat cater for organizations (businesses and
government) are known as industrial markets or
commercial markets.
+ 4 Market Structures
+
Market Characteristics
Market Size
Customer Base
Barriers 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
Alternativemeasure 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
Theseare obstacles that determine the number of
suppliers in the market.
Inmarkets 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.
Inother markets where entry barriers are
relatively low, there are a lot more businesses that
operate on a much smaller scale.
+ Competition
Thisrefers 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. Adidasis 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
Characteristicsof
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.
Itcan 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
Seasonalis any change or pattern that recurs or
repeats over a one-year period.
Cyclicaleffects 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
Motivationand 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.
Thesum 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 sales revenue:
By 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 Market Share:
Itsuggests 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 Market Leadership:
While 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
ImprovedProduct 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 New Products:
Innovation 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
Tobuild membership (support) and to connect
with new donors
To generate awareness of the NPO’s cause
To improve brand recognition of the NPO
Tocreate 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 Sony-Ericsson 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 (profit-
seeking) 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.
