The greatest pleasure in life is doing what people say you ... · Suraj

Suraj https://businessworldsuraj.weebly.com/ Business Management & Economics Shanghai

The role of marketing

“The greatest pleasure in life is doing what people say you cannot do”. Walter Bagehot (1826-1877), British journalist

Marketing is the management process of predicting, identifying

and meeting the needs and wants of customers in a profitable

manner.

The Market Market - Place or process whereby customers and suppliers trade. It exists where there is demand for a particular product. Where there is a willingness from businesses to supply these products Consumer Markets - Markets that cater for the needs and wants of private individuals. Suit the general population


Industrial or Commercial Markets - Markets that cater for the needs and wants of organisations, other businesses and government In any market, there will usually be some degree of competition. The business will also be concerned with the size of the market, the rate of growth in the market and the firm’s own market-share. Market Size Market size is measured based on the customer base to find the

total number of potential customers, or it may be measured as a

value of the volume or value of what the customers purchase. If

the business expands into other areas, they increase their

potential customer base.

Market Growth This is how fast the size of the market is increasing. It can be assessed based on the volume of the products sold, or the value. The increase is often expressed as a percentage per year. As a market grows, you are more likely to see new suppliers

entering. This increases the competition, as they all want profits.



Market Share Market share gives the business an indication of the share the business has of the sales in that market.


Firms that have a high market share tend to have good profits,

and can benefit from being market leaders and having economies

of scale. They have more pricing power and are less threatened by

competition. A business can increase their market share by;

Promotion

Product development, improvement and innovation

Motivating and training their workforce

Ensure they have property rights through patents and copyright .These stop other firms using their innovations


More efficient channels of distribution



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, i.e. those with market leadership. The sum of these market shares is known as the concentration ratio.

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Market and product orientation


Market orientation is a marketing approach used by businesses that are outward looking..


Market orientation focuses on the customer in order to identify, design, develop and supply products that meet their needs and wants.




There are advantages to this approach,


Greater flexibility in response to market changes

Less risk of a failing product.

Disadvantages

Market research can be quite expensive,

and this approach does not always guarantee success.

Their success is dependent upon

the nature of the market,

the culture of their organisation towards customers and

any barriers to entry in the market.

Product-Orientation Such businesses are described as being inward-looking, since they focus on selling their products, instead of making product to suit the needs and wants of their consumers. This often applies to innovative products, especially technological ones, which enter the market unknown. A good product can create its own market, since customers are enticed to buy creative and innovative products. These businesses will focus on selling very high-quality products,

especially exclusive and luxury ones.


‘Supply creates its own demand’ – to what extend is this

statement is true to product orient marketing approach?

The Tesla Model 3 is the first vehicle built on Tesla’s third-generation platform. It aims to reduce the entry price for electric vehicles while not making any compromise on range and performance.

The Model 3 starts at $35,000 in the US and deliveries to employees and company insiders began in mid-2017.

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Commercial marketing and social marketing

Commercial marketing is the use of marketing strategies to meet the needs and wants of customers in a profitable way. Social marketing refers to any activity that seeks to influence social behaviour to benefit the target audience and society as a whole.

Marketing objectives


The marketing objectives of for-profit (profit seeking) organizations include:

Increased sales revenue

Higher market share

Increased market leadership

Improved product and brand awareness

Developing new products

Enhanced brand perception - Customers opinion or judgement about the business

This does not necessarily apply to non-profit organizations (NPOs) such as charities, educational establishments, religious organizations and government departments.

IB Learner Profile - Be an inquirer In an industry once dominated by Motorola, Nokia and then Apple, investigate how Samsung become the world's largest mobile phone maker. A good starting point is this article from Bloomberg Businessweek: http://goo.gl/gdTr9Z


Marketing goods and services

Intangibility

Inseparability (services are consumed at the same time of

purchase)

Heterogeneity (experience is different for different

customers. Goods are homogeneous)

Perishability (services cannot be stored)

Product strategy

Price strategy

Promotional & place strategy

Place strategy (location)

Theory of knowledge

Is it more difficult to market a good or a service?


Unethical marketing

Unethical marketing exists when moral codes of practice are not adhered to and when such activities cause offense to members of the general public. 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) For example, bait and switch marketing techniques are considered to be unethical in many parts of the world. This is a controversial marketing method used to entice customers by advertising deals that are simply too good to be true. Once customers are hooked onto the deal (the bait), they discover that it is no longer available and change to purchasing another more pricey alternative (the switch) from the business. Airlines tickets, Real estate


Other examples of misleading, deceptive or unethical marketing techniques include:

Product misrepresentation




Exploitation of weaknesses


Unsubstantiated claims

Pester power

Confusion marketing

Health fraud


Travel fraud


‘Get rich quick’ schemes 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).




Marketing planning

Marketing planning is the systematic process of devising marketing objectives and appropriate marketing strategies to achieve these goals. The typical marketing planning process involves: • Marketing audit - an examination of the current climate in which the business operates. Market research is integral to this investigation. • Marketing objectives - • Marketing strategies - the plan and use of the marketing mix to achieve marketing objectives. • Monitoring and review - a continual process of checking and monitoring that targets are being met. Hence, marketing strategies might need to be adjusted accordingly. • Evaluation - an examination of the extent to which the firm has succeeded in achieving its marketing objectives. This aids decision-making and subsequent rounds of marketing planning.


The 4 P’s of marketing mix The marketing mix is the combination of various elements needed to successfully market a product. It is used to review and develop marketing strategies and is at the heart of marketing planning

Product - the good or service being marketed to meet the needs and wants of customers. Price - how much customers have to pay to buy the product.


Promotion - methods of informing, reminding and persuading customers to buy the product. Place - the distribution channels used to get the product to customers.

Activity: Design an appropriated marking mix for a product or a business of your choice. Example:


Products can be tangible (physical products) or intangible

(services) . Products must have value added in order to stand any

chance of success in the market place.

Consumer products

These are products that are purchased by private individuals for

their personal use.

* Fast moving consumer goods (FMCG) – are everyday

convenience products that are sold in retail outlets. Examples –

groceries, personal care, newspaper etc.

* Consumer perishables – are products that do not last for very

long time, such as fresh flowers or fresh seafood.

*Consumer durables – are products that are purchased irregularly

because they tend to last for relatively long time and/ or take up a

relatively large proportion of a consumer’s income. Example ;

Furniture, automobiles etc..


* Speciality consumer products- are exclusive and expensive

products that often require a large amount of commitment in

both money and time. Examples : jewellery, residential property

etc.

Producer products

Producer products or industrial goods are those that are

purchased by businesses, rather than aimed at consumers. They

are used in the production process to help the running of the

business. Examples – raw materials, machinery, tools and other

equipments.

Target markets and market segments

Targeting – means that each distinctive market segment can have

its own marketing mix. Different markets can also be targeted,

depending on whether they operate in niche, differentiated or

mass markets.


Market segmentation – is the process of splitting a market into

distinct groups of buyers in order to better meet their needs. The

main method of market segmentation is based on demographics,

geographic and psychographics factors.

Consumer profile – are the characteristics of customers and

consumers in different markets, such as their age, gender, income

and purchasing habits.

Segmentation by demographics.

Demography is the study of the characteristics of the human

population within certain areas or region. It looks at a range of

variable including:

Age

Gender

Race and ethnicity

Marital status

Religion

Language

Income and socio-economic class


Segmentation by geographic factors

Location

Climate

Segmentation by psychographic factors

Status

Values

Culture

Hobbies and interests

Advantages of segmentation

- Better understanding of customers

- Increase sales

- Growth opportunities

- Gives support to product differentiation

It is not always be possible for a business to effectively carry

out market segmentation. Marketers often use the acronym

DAMAS as a set of criteria for ensuring successful

segmentation:


Differential – segments must be unique and respond to the

different marketing mixes of the business.

Actionable – businesses must be able to provide suitable

products to cater for each segment.

Measurable – the size and purchasing power of each

segment must be quantifiable.

Accessible – the business must be able to reach customers

in customers in a cost-effective way.

Substantial – each market segment must be sufficiently

large in order to generate profits.

TARGETING

Targeting means that each distinctive market segment can have

its own marketing mix. Different markets can also be targeted,

depending on whether they operate in niche, differentiated or

mass markets.

Niche marketing

Niche marketing, also know as concentration marketing, targets a

specific and well-defined market segment.


Examples: Businesses that provide speciality goods such as

Armani suits, Ferrari cars and Cartier watches operate in niche

markets, catering for consumers interested in high-end luxury

goods.

Advantages of niche marketing:

There is better marketing focus since a specific market

segment is being targeted.

Since there is less competition, businesses can charge higher

prices for their exclusive products. This will help the business

to gain higher profit margins.

Firms become highly specialized in meeting the need and

wants of their niche target market.

Disadvantages of niche marketing:

Limited number of customers

Few opportunities to exploit economies of scale.

Highly successful and profitable niche markets may attract

new entrants into the industry.


Undifferentiated marketing (mass marketing)

Undifferentiated marketing, also know as mass marketing or

market aggregation, is the strategy that ignores targeting

individual market segments. Instead a large number of different

market segments are targeted in order to maximize sales volume.

Example : Coca-Cola, Nike, Nokia, Apple and Microsoft all use this

strategy to all market segments in the same way.

Advantages

Huge potential economies of scale from being able to supply

products in a mass market.

There is no need to tailor different marketing mixes for

different segments, this can save the business a lot of time

and resources.

Disadvantages

Competition can become quite fierce as customers must be

persuaded to buy the firm’s product rather than to buy from

a rival business.


Mass marketing is not suitable for all businesses because

there are high entry barriers for mass production.

Differentiated marketing

Differentiated marketing, also know as selective marketing or

multi-segment marketing, is the targeting strategy that tailors a

marketing mix to each market segment.

Advantages

Customers can enjoy a more satisfying experience since a

tailored marketing mix caters for their specific and individual

needs and wants.

Risks are spread out by focusing on several market segments.

Hence decline in one market segment has less of an impact

on the overall business.

Disadvantages

Differentiated marketing is costly.

Excessive differentiation can drain a firm’s resources and

confuse customers.

(In reality, many businesses will have operations that use all

three targeting Strategies)


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The greatest pleasure in life is doing what people say you ... · Suraj