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

What is a market?

• A market is a process and it exists when a group of buyers and sellers communicate to exchange goods and services.

• A market can exist in one place or in several places. It can also be virtual

How do we describe a market?

• A market is usually associated with a product

• Local, national or international;

• For consumer goods or producer/industrial goods.

Market size

• The size of a market is the total sales of all products of all firms in the market.

• It can be calculated by value ($50m) or by volume (1200 m tonnes)

Market growth

• Market growth is 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, then market growth in 2010 was …….

Market share• Market share or market penetration describe the sales of

a business or a product expressed as a percentage of the market as a whole. It can be calculated by value or volume.

• Formulae: sales of the business/total sales in the market x 100

• If the sales of a mobile phone firm is $2m and the sales of the mobile phone market is $20m, therefore the market share of the firm is …..

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

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 also enables the firm to make a profit

Nature of marketing

• Marketing is a management function. It involves management taking responsibility for planning and decision making of marketing activities.

• Marketing involves identifying the needs of customers. This can be done through market research

• Marketing seeks to satisfy the needs of customers in terms of price,availability and quality.

• Marketing is also about making a profit. Prices must therefore cover costs.

Business orientations

• Every business has a market and has developed a way of approaching its customers.

• A business orientation is the way a business approaches its customers.

• Some of the common business orientations are:1. Product orientation,2. Sales orientation, X3. Production orientation, X4. Market orientation5. Social marketing (HL)6. Asset-led marketing (HL)

Product orientation

• A product oriented firm focuses on producing a quality product with attractive features and hope that the product will sell by itself. It will invent, develop and concentrates on the technical qualities of its products.

• Such an approach is inward looking. Managers think that they know what the customers want.

Sales orientation

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

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

Market orientation

• Market orientation also known as customer orientation is an approach which is more and more adopted by businesses which are outward looking.

• They focus on identifying the needs of the customers first by market research and then develop the product that will satisfy the customers’ needs. It is often referred as the marketing concept

Advantages of adopting a marketing orientation include:

Firms can respond quicker to changes in the market because of its use of market information

Firms can be more confident that their products will sell successfully. Without proper market research, the sale of a product is more likely to be a gamble

The firm will be in a stronger position as it can anticipate competition and changes in the market.

However, this approach can be very expensive and time consuming. Also it does not always guarantee the sucess of a product

Asset led marketing (HL)

Asset led marketing is a way to market other products or to enter new markets from the strengths of core products/markets.Example:

Coca Cola has used its recognised name to launch other products such as Diet Coke, Light Coke, etc.

Big chocolate manufacturers such as Nestle have used their names to diversify into the ice cream market

The main advantage of asset-led marketing is that the firm can capitalize on its strengths and gain a competitive advantage. The main drawback is that firms tend to overlook markets in which they do no have core competencies

Social marketing (HL)

Social marketing is any activity to influence social behaviour using the marketing concept. Aids awareness and anti-smoking campaings are examples where social marketing is used

Today, many non-profit organizations and government agencies will undertake market research before launching any activity to bring about social change. This will help to discover people’s perception of the issue and determine the best actions that need to be taken.

Mass and Niche marketing

Mass marketing occurs when a business offers the same product s to all consumers and promotes them in the same way. E.g. Coca Cola

The products can be marketed in many countries (global marketing). This means that they can be produced in large quantities and firms can benefit from economies of scale (reduced average unit cost)

Niche marketing aims at a small and specialist market segment. Small firms can focus on the needs of small number of customers and very often charge a premium price. E.g. Rolex, Giordano, Ferrari cars, etc.

Marketing of goods v/s marketing of services

Will be dealt in marketing mix

Marketing in non profit organization

In marketing mix

The marketing plan

A marketing plan is a document outlining a firm’s marketing objectives and the strategies (marketing mix) to achieve these objectives.

The marketing plan is the main (but not the only one) conponent of marketing planning