4.1 The role of marketing

1. 4.1 The role of marketing • Market size, market growth and market share. • Definition of marketing • Market and product orientation • Marketing of good and services • Social marketing (HL) • Asset-led marketing (HL) • Marketing in non-profit organizations • Marketing plan

2. What is a market? • A marketis a process and itexistswhen a group of buyers and sellerscommunicate to exchange goods and services. • A marketcanexist in one place or in several places. It canalsobevirtual

3. How do we describe a market? • A marketisusuallyassociatedwith a product • Local, national or international; • For consumer goods or producer/industrialgoods.

4. Market size • The size of a marketis the total sales of all products of all firms in the market. • It canbecalculated by value ($50m) or by volume (1200 m tonnes)

5. Market growth • Marketgrowthis the rate of increase in the size of a market by value or volume. • If the market of mobile phone in 2009 was $20and in 2010 $30m, thenmarketgrowth in 2010 was …….

6. Market share • Marketshareor marketpenetrationdescribe the sales of a business or a productexpressed as a percentage of the market as a whole. It canbecalculated by value or volume. • Formulae: sales of the business/total sales in the market x 100 • If the sales of a mobile phone firmis $2m and the sales of the mobile phone marketis $20m, therefore the marketshare of the firmis …..

7. The main factors influencing the growth and size of a market include: Economic changes, e.g. rising incomes have help the growth of the market for high class restaurants Social changes, e.g. an increase in the proportion of working women has led to a growth in the market for child care. Technological changes,e.g. improvements in the technology of downloading of music has led the growth in the market of Ipods and decline in the sales of CDs. Demographic changes, e.g. changes in the age structure can affect markets. Legal changes can also affect markets

8. Definition of marketing • Marketing is the sum of all activities and management process in identifying, planning and satisfying the needs and wants of customers and alsoenables the firm to make a profit

9. Nature of marketing • Marketing is a management function. It involves management takingresponsibility for planning and decisionmaking of marketing activities. • Marketing involvesidentifying the needs of customers. This canbedonethroughmarketresearch • Marketing seeks to satisfy the needs of customers in terms of price,availability and quality. • Marketing isalso about making a profit. Prices must thereforecovercosts.

10. Business orientations • Every business has a market and has developed a way of approachingitscustomers. • A business orientation is the way a business approachesitscustomers. • Some of the common business orientations are: • Product orientation, • Sales orientation, X • Production orientation, X • Market orientation • Social marketing (HL) • Asset-led marketing (HL)

11. Product orientation • A productorientedfirmfocuses on producing a qualityproductwith attractive features and hopethat the productwillsell by itself. It willinvent, develop and concentrates on the technicalqualities of itsproducts. • Such an approachisinwardlooking. Managers thinkthatthey know what the customerswant.

12. Sales orientation • Sales orientation is an approach adopted by businesses which focus on selling techniques. A sales orientedfirmbelieves that sales will increased if customers are pursuaded to buy the goods.

13. Production orientation • Production orientation is an approach whereby the firm concentrates on the production techniques so that the goods are produced at the lowest cost possible, e.g. minimum wastage

14. Market orientation • Market orientation alsoknown as customer orientation is an approachwhichis more and more adopted by businesses which are outwardlooking. • They focus on identifying the needs of the customers first by marketresearch and thendevelop the productthatwillsatisfy the customers’ needs. It isoftenreferred as the marketing concept

15. Advantages of adopting a marketing orientation include: Firmscanrespondquicker to changes in the marketbecause of its use of market information Firmscanbe more confident thattheirproductswillsellsuccessfully. Withoutpropermarketresearch, the sale of a productis more likely to be a gamble The firmwillbe in a stronger position as itcananticipatecompetition and changes in the market. However, thisapproachcanbeveryexpensive and time consuming. Alsoitdoes not alwaysguarantee the sucess of a product

16. Assetled marketing (HL) Assetled marketing is a way to marketotherproducts or to enter new marketsfrom the strengths of coreproducts/markets. Example: Coca Cola has useditsrecognisedname to launchotherproducts such as Diet Coke, Light Coke, etc. Bigchocolatemanufacturerssuch as Nestle have usedtheirnames to diversifyinto the icecreammarket The main advantage of asset-led marketing isthat the firmcan capitalize on itsstrengths and gain a competitiveadvantage. The main drawback isthatfirms tend to overlookmarkets in whichthey do no have corecompetencies

17. Social marketing (HL) Social marketing isanyactivity to influence social behaviourusing the marketing concept. Aidsawareness and anti-smoking campaings are exampleswhere social marketing isused Today, many non-profit organizations and governmentagencieswill undertakemarketresearchbeforelaunchinganyactivity to bring about social change. This will help to discoverpeople’s perception of the issue and determine the best actions thatneed to betaken.

18. Mass and Niche marketing Mass marketing occurswhen a business offers the sameproduct s to all consumers and promotesthem in the sameway. E.g. Coca Cola The productscanbemarketed in many countries (global marketing). This meansthattheycanbeproduced in large quantities and firms canbenefitfromeconomies of scale (reducedaverage unit cost) Niche marketing aimsat a small and specialistmarket segment. Small firmscan focus on the needs of smallnumber of customersand very often charge a premium price. E.g. Rolex, Giordano, Ferrari cars, etc.

19. Marketing of goods v/s marketing of services Will bedealt in marketing mix

20. Marketing in non profit organization In marketing mix

21. The marketing plan A marketing plan is a document outlining a firm’s marketing objectives and the strategies (marketing mix) to achievethese objectives. The marketing plan is the main (but not the only one) conponent of marketing planning