4.

1 The Role of Marketing

Shivani Butala
Jini Huh
Jane Kang
Lauren Tatsumi
Period 0
Group 1
 Introduction

 Marketing- Exists to address the needs and

wants of society
– Needs are essential necessities that are needed
to survive
– Wants are things that are desired but not
necessary
 All about convincing customers to buy
products of a business
 Objectives of Marketing

 Make sure correct products are supplied to

satisfy the wants and needs of customers
 Set the right price so customers can afford to
buy a product and not buy from a rival
business
 Distribute products to a place that is easy for
customers to purchase them
 Effective and adequate promotion
 The Market

 Market
– A place or process where customers and
suppliers trade
 Where and when do markets exist?
– Where there is a demand for a product and there
is a willingness to supply these products
– Example: Cell phone market
 Market continued

 Consumer markets vs. Industrial markets

– Consumer markets
 Cater to private individuals (general public)
– Industrial markets
 Cater to organizations (businesses and government)
 Market continued

 Businesses are interested in 3 main

elements of the market in which they operate
– Market Size
– Market Growth
– Market Share
 Market Size

 Markets differ in size

 Can be measured several ways
– Customer Base
– Barriers to entry
– Location
 Customer Base

 Total potential amount of customers

 Also measured in terms of the value, not just
the quantity, of what is purchased
– Ex. Ipod/MP3 market larger than loose leaf paper
market
 Barriers to entry

 Determine the number of suppliers in the

market
 The higher the barriers to entry the more
power in the hands of the established
businesses in the market
– Ex. Car manufacturing vs. Photography business
 Location

 Some markets focus on certain areas or

regions
 Others are global
 Market Growth

 The increase in the size of a market over

time, usually per year
 Can be measured by an increase in the
value or volume of sales
– Ex. Android market (smart phones)
 Market Share

 An organization’s share of the total sales of

all products in a specific market
 Formula:
– Market share= Sales Revenue X 100
Total sales revenue in market
 Benefits of High Market Share

 Positive relationship between market share

and profits
 Market leaders
 Economies of scale
 Better pricing power
 Less threatened by rival firms
 Reasons not to increase market
share

 Overall profits may decline if it is gained by

increasing promotional expenditures or by
decreasing prices.
 A price war may ensue if competitors attempt
to regain their share by lowering prices.
 Market Concentration

 Extent or degree to which a relatively small

number of firms account for a relatively large
percentage of the market
– Oligopolists- Businesses that dominate a certain
market
 Examples:
 Definition of Marketing

 A management process where it requires

people to take responsibility for decision
making
 Anticipation or predicting what customers
may want in the future
Marketing + Other functional areas

 Marketing is used alongside other functional areas

– Operations Management
 Use sales forecasts to prepare production schedules
 Help research, develop, and launch products
- Finance
 Help set appropriate budgets for the marketing department
- Human Resource Management
 Marketing data can help the HR department to identify and meet staffing
requirements
What is Product Orientated Marketing?

 is a marketing approach adopted by businesses

that are inward looking.
 these inward looking businesses focus on
selling products that they can make, rather than
making products that they can sell.
 focuses on what the business itself thinks its
customers want, instead of identifying and
meeting the needs and wants of its customers.
Say’s law

 “supply creates its own demand.”

 creative and innovative products are
launched onto the market and customers will
be tempted to buy these.
 usual result is that these products are hit-
and-miss.
Advantages

 The main advantage is that quality can be

assured.
– The belief is that customers are willing to pay a
higher price for exclusivity and luxury products.
 The firm has more control over its activities.
Disadvantages

• Product-orientated firms assume they know what

customers want.
- Customers do not simply want an improved version of an
existing product.
 The needs of the market are ignored, such
as changes in fashion and tastes, so the high
failure rate of businesses suggests that this
strategy is highly risky.
What is Market Orientated Marketing?

 a.k.a. consumer orientation

 Is a marketing approach adopted by businesses that
are outward looking.
 these outward looking businesses focus on making
products that they can sell, rather than selling
products that they can make.
 focuses on identifying and meeting the needs and
wants of its customers, instead of what the business
itself thinks its customers want.
 Most of today’s markets are market orientated.
Advantages

 Flexibility – firms can quickly adapt to

changes in the market as they will have
access to relevant data and information.
 Less risk – firms can be more confident that
their products will sell and be successful
since their products are deliberately catered
to meet the wants/needs of consumers.
Disadvantages

 The main disadvantage is market research

tends to be very expensive.
 There is no guarantee that this approach will
lead to success.
Factors influencing type of orientation

 Market – Producers of highly technical products

tend to start off as product-orientated businesses.
In mass consumer markets, a more market-
orientated approach tends to be adopted.
 Organizational culture – Businesses that believe
‘the customer is always right’ are more likely to be
market orientated.
 Nature of barriers to entry – Firms without much
competition tend to be less customer-focused;
such firms hold monopoly power.
Goods
 Def- a tangible product that can be
purchased

Marketing mix for goods consists of:

 Price
 Product
 Promotion
 Place
Services

 def-an intangible product such as a bus ride,

a visit to the cinema, or a haircut
 Involves no purchase of a physical good
 are heterogeneous so the quality is varied
 Are meant for customers to fulfill their wants
or needs
 Non-refundable
Marketing of Service

 7 P’s of marketing mix

( price, product, promotion, and place )

Along with…
 People
 Processes
 Physical environment
People

Effectiveness of people delivering a service

depends on:
- appearance and body language
- aptitudes and attitudes
- feedback
- efficiency
Processes

Process in the marketing services include:

- payment methods
- waiting time
- customer services
- after-sales care
Physical Evidence (physical environment)

 Def: the tangible aspects of a service

 Example: a clean lobby with a nice décor at a 5-star hotel
 What makes customers feel happy with the overall service

Challenges facing managers in delivering quality customer

services:
- correcting mistakes
- measuring productivity
- people management
Physical evidence (cont.)

 Correcting mistakes: can be easy to correct mistakes in

manufacturing a physical good, but it can be difficult to correct
any mistake in a service. A mistake in a service can create a
poor image for the company.
 Measuring productivity: it can be difficult to reward the staff that
is more productive.
 People management: Managing people in professions that offer
services can be labor intensive and difficult; it requires effective
leadership on the part of the manager.
Non-Profit Organizations

 Definition of Non-profit organizations: establishments

that are run in a professional and business-like
manner but without profit being the major objective.

Ex: charities, religious organizations, and government

departments
Marketing in Non-Profit Organizations

 Tends to be more informative

 Not as persuasive as profit-seeking organizations
 Main aim is for the public to take action, not to make a profit

Strategies:
- social marketing
- catchphrases (slogans)
- de-marketing
- public relations
- internet technologies
- distribution channels
 Social marketing – try to make the public take action by, for
instance, donating money to the cause.
 Catchphrases (slogans) – used to promote their causes.
 De-marketing – the use of marketing to reduce the demand for
socially undesirable products, such as tobacco; also used to inform
or persuade citizens to act in a particular way or to change their
behavior.
 Public relations – inform people of the cause by holding fundraising
events or using celebrities to endorse their cause.
 Internet technologies – firms that use the internet can promote their
cause in a cost-effective way
 Distribution channels – focus on promoting the image of the
organization, for its long-term survival.
Marketing Plan

 A document outlining a firm’s marketing

objectives and the marketing strategies to be
used in order to achieve these objectives
Marketing Audit

 Marketing plan usually preceded by

marketing audit
 It is a review of the current position of a firm’s
marketing mix, in terms of strengths,
weaknesses, opportunities, and threats
(SWOT analysis)
 May address issues (intensity of competition
in the market, effectiveness of the firm’s
marketing)
In a Marketing Plan

 SMART marketing objectives

 Identify target markets through methods of
market research
 Strengths and weaknesses of competitors
 Outline of marketing mix
 Details of the marketing budget
 Outline of likely problems
(cont.)

 PEST analysis
 SWOT analysis
Advantages of Market Planning

 Improves chances of success

 Functional areas of a business will have
clearer idea of firm’s objectives and
constraints
Disadvantages of Market Planning

 Small firms do not have time, resources, or

expertise
 Large firms also need to devote resources
 Can become outdated quickly or instill
inflexibility in the organization
Overview

 Marketing is about understanding the

markets in which a business operates in
order to develop strategies to influence
the action of others
 Marketing allows businesses to be forward
looking
 Businesses approach marketing in different
ways
 – Market-led approach to marketing puts customer
at the top of priority (consumer sovereignty—
consumer is ruler and is always right)
 Location of business is vital to the customer
 Marketing is not only important to large
organizations but also to small and non-profit
organizations
 Businesses often fail due to lack of proper
planning
– They may not have considered the extent of
competition in the marketplace or changes in
market conditions
 Market planning gives a sense of direction to
the business