“Marketing is the management process responsible for identifying, anticipating and satisfying people´s needs and wants profitably” Marketing involves a number of related management functions:
- Market research - Product design - Pricing - Advertising - Distribution - Customer service - Packaging
Key definition: marketing is the management task that links the business to the customer by identifying an meeting the needs of customers profitably – it does this by getting the right product at the right price to the right place at the right time.
Related concepts Markets
One meaning of this word is the place or mechanism where buyers and sellers meet to engage in exchange. The weekly fruit and vegetable market would be one example. However, the term market refers to the group of consumers that
are interested in a good or service, has the resources to purchase it and is permitted by law to purchase it.
Consumer markets and industrial markets
Key definition: consumer markets are markets for goods and services bough by the final user of them.
Key definition: industrial markets are markets for goods and services bought by businesses to be used in the production process of other products.
When selling a good like a computer to other businesses, the manufacturer will: - Not focus on high-street retail stores, but use more resources on industrial
exhibitions and direct or personal selling to companies.
- Customise each computer system to the exacts requirements of each business customer
- Promote the product as being a cost-saving and profitable choice – not something that will satisfy a consumer desire or need.
- Produce technical promotions and literature that will recognise that the business´s customers will cery likely be knowledgeable and will be making an informed choice.
Human needs and wants
A human need is a basic requirement that an individual wishes to satisfy. Physical needs include food, water, shelter and clothing.
Wants are broader in their perspective. They are things we do not need for our survival, but they do satisfy certain requirements. For example, a need is of someone is to feed themselves. However, a want is to feed themselves with a high quality steak or importation sushi.
Value and satisfaction
Value is not the same as cheapness a consumer will consider that a product has a good value if it satisfies customers with a reasonable price. If it has a good quality and is at a reasonable price then it is a good value. not always expensive goods have a good quality.
Marketing objectives and corporate objectives
The long-terms goals of a company will have a significant impact on both the marketing objectives and the marketing strategies. A business with long term objectives will include both profitability and achieving the goals of social responsibility. Whereas a business with short term objectives will focus on maximising sales. Examples of marketing objectives include:
- Rebranding a product to give it fresh appeal - Increasing total sales levels
- Market development – selling existing products in new markets To be effective, marketing objective should:
- Fit with the overall aims and mission of the business and attempt to achieve them
- Be determines by senior management
- Be realistic, motivating, achievable, measurable and clearly communicated to all departments in the organisation
Why are marketing objectives important?
- They provide a sense of direction for the marketing department - Progress can be monitored against these targets
- They can be broken down into regional and product sales targets to allow for management by objectives
- They form the basis of marketing strategies Coordination of marketing with other departments
The links between marketing department and other functional departments is vital for a successful marketing strategy. Some examples of these links are: Marketing – finance: finance department will use sales forecasts produced by the marketing department in order to construct a cash flow forecast and operational budgets. Also they will ensure that the necessary capital is available for
expenditures like promotions.
Marketing – human resources: sales forecast used to help devise a workforce plan for all departments affected by market strategies. HR will also have to ensure that appropriate and qualified staff has been chosen to perform a task. Marketing – operations: market research data will help product development. Sales forecasts will plan capacity needed, purchase machines and the stock or raw materials required
Market orientation and product orientation
Market orientation: and outward-looking approach basing product decisions on consumer demand, as established by market research. Benefits of market orientation:
- When consumer needs are met with appropriate products, they are likely to survive and continue increasing profits
- Constant feedback from customers will help developing future products Product orientation: in inward-looking approach that focuses on making products that can be made – or have been made for a long time – and then trying to sell them. Product orientated businesses invent and develop products in the belief that they will find consumers to purchase them. WAP mobile phones were driven more by technical innovation than by consumer needs.
Product-orientated businesses concentrate their efforts on efficiency producing high-quality goods and believe quality will be valued more than fashion.
Evaluation of these two approaches
The trend moves towards market orientation, but there are some limitations. Trying to offer range and choice so that every consumer need is met can be really expensive. On the other hand, innovation and researching can lead a business to success.
Key definition: asset-led marketing: and approach to marketing that bases strategy on the firm´s existing strengths and assets instead of purely on what the customer wants.
Asset-led marketing is based on market research too, but does not attempt to satisfy all consumers in the market. For example BMW does not enter the commercial-vehicle or motor-caravan markets – but it does use its brand to sell luxury SUVs.
Societal marketing
This approach considers not only the demands of consumers but also the effects on all members of the public (society) involved in some way when firms meet these demands. The social-marketing concept has the following implications:
- It is an attempt to equilibrate 3 concerns: company profits, customer wants, society´s interest
- There may be a difference between short-term consumer wants (low prices) and long-term consumer and social welfare (protecting
environment or paying workers adequate wages).
- Businesses should still aim to identify and satisfy needs and wants more efficiently than competitors.
- Using this concept can give advantage towards competitors. Consumers often buy from responsible businesses.
- If this strategy is successful it could lead the business to being able to charge higher prices.
Demand, supply and price relationships
Demand is the quantity of a product that consumers are willing and able to buy at a given price in a time period. Supply is the quantity of a product that firms are prepared to supply at a given price in a time period. Here marketing manager will need to know how free markets work to determine prices. If the business can produce goods at this price it should be profitable. In free markets the equilibrium price is demand is equal to supply.
Demand
1. It varies with price – normally the when quantity of goods bought rise is due to a fall in price. Shown by the demand curve.
2. Apart from price changes – which change the demand curve – the demand level can change due to these:
- Changes in consumers incomes
- Changes in the prices of substitute goods and complementary goods - Changes in population size and structure
- Fashion and taste changes
- Advertising and promotion spending Supply
1. This varies with price – businesses willing to supply a product if the price is high.
2. Apart from changes in price, the level of supply can vary due to a change in these factors:
- Costs of production: changes in labour or raw material costs
- Taxes imposed on the suppliers by governments, which raise their costs - Subsidies paid by government to suppliers, which reduce their costs - Weather conditions and other natural factors
- Advances in technology to make cost of production lower Determining the equilibrium price
The equilibrium price is the market price that equates supply and demand for a product. when prices are high there will be unsold stock. To avoid this suppliers reduce prices so stock runs out.
Market Location
Some businesses operate locally, in their own community, where the business is located. Then come the regional businesses which are larger. And finally the hardest to achieve, national business.
However international businesses have a much large range of products to offer and different places where selling them.
Size
This is the total level of sales of all producers within a market. This can be measured in volume of sales (units sold) or value of goods (revenue).size is important because:
-a marketing manager can assess whether a market is worth entering - Firms can calculate their own market share
- growth or decline of the market can be identified Growth
This is the percentage change in the total size of a market (volume of value) over a period of time. The pace of growth will depend on several factors, such as general economic growth, changes in consumer incomes and development of new markets and products. However factors like technological advances can increase the growth.
Share
This is the percentage of sales in the total market sold by one business. This is the most effective way of measuring the success of a business in the market towards its competitors. If a business is successful it means their marketing strategies have been successful. The benefits of a higher market share are:
- Sales are higher than most competitors which lead to higher process. - Retailers will be keen to stock and promote the best selling business. - As shops are keen to stock the product, it might be sold to them with a
lower discount rate – 10% instead of 15%, which has to be offered by the smaller, competing brands.
- Consumers are keen to buy the most popular brand.
Important marketing concepts Adding value
Added value means the difference between the selling price of a product and the cost of the materials and components bought in to make it. Here are some
strategies that are likely to add value:
- Create exclusive and luxurious retail environment to make consumers feel that they are being treated as important. These will make them feel they are more prepared to pay higher prices and may have physiological effect on convincing them that the product is of a good quality too.
- Use high-quality packaging to differentiate the product from other brands - Promote and brand the product so that it becomes a “must have” brand
name which consumers will pay a higher price for.
- Create a unique selling point that clearly differentiates a product from that of other manufacturers
Product differentiation is making a product distinctive so that it stands out from competitors products in consumer perception
Unique point of sale (USP) is the special feature that differentiates it from competitors products.
Mass marketing and niche marketing
Mass marketing is identifying is selling the same products to the whole markets with no attempt to target groups within it. Niche marketing is identifying and exploiting a small segment of a larger market by developing products to suit it. The advantages of niche marketing are:
- Small firms may be able to survive and thrive in markets that are dominated by larger firms
- If market is unexploited by competitors, then filling a niche can offer the chance to sell at high prices and high profit margins.
- Niche market products can also be used by large firms to create status and image.
Advantages of mass marketing also viewed as disadvantages of niche: - Small niches do not achieve economies of scale
- Mass-market strategies run fewer risks than niches
Market segmentation
Market segment is a group of a whole market in which consumers have similar characteristics. Market segmentation is identifying the different segments within
a market and targeting different products or services to them. Examples of market segmentation is coca cola varieties, Renault megane varieties. Market segmentation – identifying different consumer groups
Consumer profile is a quantified picture of consumers of a firm´s products, showing proportions of age groups, income levels, location, gender and social class
Geographical differences
Consumer tastes may vary between different geographic areas and so it may be appropriate to offer different products and market them in location specific ways. Demographic differences
Demographic factors like age, sex, family size and ethnic background, can all be used to separate markets. Income and social class are two very important
factors leading to segmentation. The main socio-economic groups in Britain are: A: upper middle class: higher managerial administrative and professional: lawyers, company directors
B: middle class: managerial staff: teachers
C1: lower middle class: supervisory, clerical or junior managerial C2: skilled manual workers
D: working class: semi-and unskilled manual worker E: casual, part-time workers and unemployed. Psychographic factors
They are to do with people´s lifestyles, personalities, values and attitudes.