Transcript The role of marketing

4.1 The Role of Marketing
What is marketing??
No single definition!!
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There are several definitions of
marketing as it is a complex
process of many integrated and
coordinated activities in a business
But here is one…
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Anticipating consumers’ needs and wants
and attempting to satisfy them profitably.
Relationship between marketing and other functions
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Marketing and human resources: market
research can reveal information
about the business industry/market
that determines the human
resources necessary to carry out the
marketing function successfully.
MARKETING AND
HUMAN RESOURCES
Marketing with production
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Marketing conducts research to
determine the most suitable
products to produce. Hence,
operations management is directly
involved with marketing.
MARKETING AND
PRODUCTION
Marketing with accounting finance
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Marketing needs require resources, while
results affect revenue. More or less finance
may be needed.
MARKETING AND
FINANCE &
ACCOUNTING
The marketing mix
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Product is a broad term referring to both goods
and services.
In order to market a product profitably, it must be
produced, priced, promoted and distributed
suitably.
Marketing mix for goods
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Goods are tangible and their marketing
mix includes product, price, promotion,
and place.
Marketing mix for goods
Product-design, color, size, shape, flavor,
materials, package, etc..
 Price-pricing policy suitable to the image and
brand reflecting what the customer is willing to
pay.
 Promotion-methods of informing and
persuading customers to buy the product.
 Place-where the product will be distributed and
sold and whether intermediaries will be used
(channel of distribution).Remember goods are
not frequently sold in the same location they
were produced.
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Marketing mix for services
Services are intangible products.
 Their marketing mix includes 7 P’s:
Product, Price, Promotion, Place,
People, Process, and physical evidence.
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Marketing mix for services
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In addition to the 4 P’s, People,
Process, and Physical evidence are
added when creating the marketing
mix for services. Sometimes known as
CRM.
Customer Relations Management
People
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People: services rely primarily on
people delivering the right quality
skillfully, pleasantly, and politely
with a professional yet warm
manner.
People
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The effectiveness of a service is dependent
on a number of factors existent in the
people performing it:
Appearance, manner, and body language.
Proficiency and communication skill.
Response to customer including speed
with feedback.
Adaptability to customer types and needs.
Process-the method a service is delivered
1. Service method
2. Waiting time
3. After sales service
4. Payment method
Physical evidence-refers to the tangible elements
involved in the service. E.g. hotels
1.
2.
3.
4.
5.
6.
Décor and color scheme
Location and parking facilities
Well groomed elegant staff
Hygiene
Beverages or light snacks offered while
performing the service
Brands used throughout
Challenges in delivering services
Employee management-demotivated employees
project their sentiment onto the customer often
losing them to the competition. Motivated
pleasant employees sell the brand!!
 Measuring employee performance and
productivity and keeping them consistent
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Dealing with angry customers!!!
Angry indeed….
Irate customers….
Goods
Services
Tangible
 Separable
 Homogeneous
 Perishable
 Product strategy
 Price strategy is often lower
 Promotional strategy
 Place strategy uses
channels of
distribution
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Intangible
 Inseparable
 Heterogeneous
 Non-perishable
 Product strategy
requires higher value
added
 Promotional strategy
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Place strategy uses physical
evidence and location
Marketing for good versus services
Marketing department
The main functions of a marketing division in a
business are:
1. Market research-obtaining market information
such as market size, market growth, amount of
competition and respective market share, and
consumer profiles along with (PEST) factors.
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2.
Creating a suitable marketing mix for the
business products (goods and/or services)
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The Marketing mix for products is
defined as the combination of
product, price, promotion, and place
to ensure product success.
3. Creating and enhancing brands and
improving business image and reputation.
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Creating uniqueness for a brand
and ensuring it is maintained.
4. Public relations
Ensuring the business is on good
terms with other businesses and
media and enhancing its reputation.
This is especially true during crises.
 It is the marketing department’s
responsibility to maintain the
business in high market standing
(Positive reputation and image).
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THE MARKET
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This term includes:
Types of markets
Market size
Customer base
Barriers to entry
Competition
Geographic characteristics
Demographic characteristics
Seasonal and cyclical characteristics
Market growth
Market share
What is a market??
A
market is a situation where
buyers and sellers come
together to trade.
Types of markets
Consumer markets-businesses
selling to consumers (B2C)
 Industrial markets/commercial
markets-businesses selling to
businesses (B2B)
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Buyer
seller
Market size
The value of total sales in a
particular industry or market.
 It is calculated by multiplying the
number of customers and their
buying frequency by the average
price in the market.
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Customer base
Customer base-a measure of the total
potential number of customers in a
market.
 Businesses that continuously enter new
markets widen their customer base.
 This is especially true if they enter
populous countries such as China.
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Rivalry/competition
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The larger the number of
operators/businesses vying for the
same customer. The more the
businesses, the larger the market is
likely to be.
Barriers to entry
 Factors
that make it difficult for new
firms to enter an industry.
 The number and size of existing
businesses determine how many
barriers exist.
 The larger the existing firms, the more
the barriers to entry.
Barriers to entry
Financial
 Legal
 Extensive economies of scale in
existing firms
 Loyalty for existing brands
 High concentration ratio-high
market share for existing
businesses
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Demographic characteristics
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Some markets focus on gender
or age characteristics such as
infant formula producers, who
will do so for markets with
high birth rates such as China
or India.
Seasonal and cyclical characteristics
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Highly seasonal markets such as
tourism tend to focus their strategy
and decision making on such
factors as weather and time of the
year.
Geographic characteristics
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Markets may focus on geographic
locations such as certain countries
or regions. For example the
vegetarian or vegan market
focused in India since nearly 1
billion vegetarians reside in India.
Market growth
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The expected percentage increase
in market size. For instance, the
higher the population, the larger
the food market.
Market share
 The
percentage a business’s sales
comprise of the total market.
 Calculated
by the formula:
Firm’s sales revenue x 100
Industry’s sales revenue
Market share
 Businesses
with the
highest market share are
known as market leaders.
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They are able to limit new entrants
through creating (barriers to entry)factors that make it difficult for new
businesses to enter the industry.
Market concentration
For instance, if three firms
exist in a market with high
market shares, it is said to be
a market with a three-firm
concentration ratio (CR).
 CR can be calculated by
adding up the top 3, 4, 5 etc.
firms’ shares.
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Here it is……
Smartphone market shares
Market VS Product orientation
Firms may approach marketing differently:
 Product oriented-inward looking approach where
the businesses focus on the products they can make
well and attempt to sell them. High tech firms are
examples.
The core
focus is
the
product
Product
Benefits and drawbacks
They tend to be quality oriented producing a technically
superior product, which the firm believes will ‘sell itself’.
 They may supply ‘specialty’ products that customers become
loyal to through exclusivity such as Cohiba cigars.
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However..
 A high failure rate often exists as
market trends may be overlooked.
 The research and development cost can
run quite high.
Market oriented
Market oriented/customer oriented-outward
looking/market led.
 These businesses research what the customer
wants and then attempt to produce it.
 The core focus is customer satisfaction
The core
focus is
the
customer
Customer
satisfaction
Benefits…..
Flexible
 Less risky
 High success rate as it is catered
to market trends
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Customer
satisfaction
However!
Market research is costly
 Customer tastes could change
rapidly before the business makes
sufficient profits.
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Product VS market oriented
The core
focus is
the
product
The core
focus is
the
customer
Product
Customer
satisfaction
Product VS market oriented
Product oriented
 Inward looking
 Product focused
 Market research done
after production
 Riskier
 Higher failure rate
 Less flexible
Market oriented
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Outward looking
Customer focused
Market research done
before production
Less risky
Lower failure rate
More flexible
Factors affecting which approach a business may adopt
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Market-highly technical products such as
industrial vacuum cleaners tend to be
product oriented
Customer-B2B producers tend to be
product oriented
Business values-businesses who value
customer satisfaction most tend to be
market oriented
Barriers to entry-the less the barriers,
the less customer focused a business
tends to be
Commercial versus social marketing
Commercial marketing involves
designing marketing activities for the
purpose of increasing sales and profit.
 Social marketing involves designing
marketing activities for the purpose of
modifying behavior.
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Social marketing
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Defined as programs and tactics aimed at bringing about
social change in behavior and/or beliefs.
It uses some of the commercial marketing tactics.
Philip Kotler (1971), founder of social
marketing defines it as: “any activity that
seeks to influence social behavior to benefit
the target audience and society as a whole.”
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NPO’s tend to use social marketing.
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Examples of social marketing campaigns
Social marketing
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Pricing decisions in social marketing tend to
be based on NET BENEFITS. I.e. the difference
between the benefits and the costs of a
certain behavior.
For instance, in Hong Kong where littering is
heavily fined, people are likely to modify their
littering behavior faster than other countries
with lesser fines for littering. This is where
social marketing tends to work best!
Promotion in social marketing
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Messages must be persuasive, clever,
innovative, often shocking to trigger
reactions in the intended target first
but others as well to implement
change.
Place in social marketing
Place is significant in social
marketing since convenience is
key if behavior change is to take
place.
 Where messages are displayed is
chief to success to ensure the
intended target receives them!!
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Process in social marketing
Extensive use of distribution channels. For
instance donation boxes for NPO’s can be
available in supermarkets at the cash till stand.
 Purpose???
 Convenience, convenience, convenience!!
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Marketing in NPO’s
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NPO’s tend to use social marketing tactics employing:
Catchphrases
De-marketing (Philip Kotler)-reducing demand for socially
undesirable products such as alcohol.
Public relations
Social media and internet technology
Difficulties in Social marketing
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In general, social marketing is more difficult than conventional
commercial marketing, requiring as much or more perseverance
and greater ingenuity and imagination.
For market analysis, social marketers have much more difficulty
accumulating valid, reliable, and relevant marketing data.
In the area of market segmentation, they often face pressures
against segmentation, especially segmentation that leads to the
ignoring of certain segments. Further, their target segments often
consist of those consumers who are most intensely resistant to
their message.
Commercial vs social marketing
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Commercial marketing involves using strategies and tactics that aim to
meet consumer needs and wants for the purpose of increasing sales
toward higher profit.
WHILE……….
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Social marketing uses commercial marketing
methods toward changing behavior.
Commercial marketing
Social marketing
Purpose-making profits
 Benefits-customers
through product
satisfaction and
business through
profits
 Users-Private sector
enterprises
 Focused on customer
needs and wants
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Changing behavior
 Benefits intended
audience and society as
a whole
 Users-NGO’s
 Focused on customer
behavior
Commercial VS social marketing
CUEGIS
Links to the course concepts???
 Social marketing
ethics
 Commercial marketing
strategy?
 Marketing mix
culture??
 International marketing
globalization
 Other??
TOK
TOK links??
 To what extent can the success of
social marketing be measured?
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