TOPIC 4 - marketing

• Marketing is the function of the business that is responsible for understanding customer needs and developing the right products, setting the right price, and promoting and distributing products in the right way
• Marketing is the process of planning and undertaking the conception, pricing, promotion, and distribution of goods and services to create and maintain relationships that will satisfy individuals' and organizations' objectives
• Marketing provides the link between the customer and the production function of the business. Marketing ensures that what is being provided is actually wanted and needed, communicates, and makes the product available for customers
• Importance of marketing


  • Effective marketing occurs when a business fully understands the requirements of its customers and is able to meet these needs successfully
• Reasons why marketing is an ongoing process

  • Customers' needs change over time
  • The business environment can change
  • Competitors enter the market with their own offerings
  • Firms' own strengths to change and develop
• Effective marketing


  • Leads to high levels of customer satisfaction
  • Customers are more likely to come back and buy more
  • Customers are more likely to tell their friends to come and try the products
  • Customers may be more willing to try new products launched by the business
  • Customers may become loyal to the product and less likely to switch to competitors
• The purpose of marketing is to ensure that the organization meets the customers' needs in the present and in the future. Marketing is therefore a dynamic process
• To be effective, marketing must work with other functions of the business to influence what is produced, how many are produced, the range of products offered, and the price at which products are sold
• Market orientation


  Bases its decisions on customers' needs, monitors its environment to find out what customers want, what competitors are offering, and what changes are occurring in the market
• Product orientation


  The business focuses more on what it can produce and hopes that this will fit with customer requirements. This is a very risky approach because the firm may produce something the customers do not want
• Typical marketing objectives


  • Sales target
  • Market share
  • Brand awareness
• Marketing objectives will be linked to the overall objectives of the business - the corporate objectives
• Market size


  The total number of items sold (this is measuring volume) or the total value of sales
• Market share


  A business's sales as a percentage of total market sales
• Importance of market share and market leadership

  • It shows the business is competitive relative to its rivals because its sales are higher than theirs, which may mean higher profits
  • It may bring more recognition of the business and its products, and may give a strong reputation
  • The cost advantages of being bigger; these are called economies of scale
• Market growth


  The rate at which the market as a whole is growing over a given time period
• If the growth rate is positive, it means the market is getting bigger. If the growth rate is negative it means the market has become smaller
• Significance of market growth

  • Businesses will prefer fast-growing markets because they can sell more
  • If the market is static, one firm can only sell more at the expense of another, which can lead to aggressive and competitive behaviour
• Market leadership


  The company holding the highest amount of market share in the industry
• There is a positive correlation between market share and profits, though the company with the largest market share is not necessarily the most profitable
• Companies can be dominant market players and gain a range of economies of scale
• Firms with higher market share have better price setting ability and are less threatened by competition
• Marketing strategy


  A marketing plan to achieve the marketing objective
• Marketing objective


  A marketing target for the business, setting out what it wants to achieve and when
• Corporate objective


  A target set for the business as a whole
• The marketing plan sets out the marketing objectives, strategy, budget, and marketing activities necessary to achieve the marketing objectives
• The marketing plan is likely to be based on market research. This research will inform the marketing decisions to ensure they are logical and supported by the data
• Information market research is likely to provide

  • The market size
  • The likely market growth
  • The segments in the market and their size and growth
  • The positioning of competitors according to customers
  • Customers' views of the brand
  • Information about the level of sales, through different distribution channels and trends in distribution
• Elements of a marketing plan

  • An executive summary of the key points of the plan
  • A market analysis including details of the target market and competition
  • The marketing objectives
  • The marketing strategy
  • The resources required
  • The marketing budget
  • Details of marketing activities
• Role of marketing planning

  • It is a systemic process that involves undertaking a marketing audit, setting marketing objectives, devising marketing strategies, and setting out how these would be implemented
• Market segment


  A group of clearly identifiable customer needs and wants
• Segmentation


  The process of dividing the market into subgroups based on defined attributes
• Attributes for market segmentation

  • Demographics
  • Psychographics
  • Geographic
• Target market


  A particular market segment that a business focuses its marketing activities on
• Targeting


  The process of choosing a target market
• Position map


  A visual tool to help a business see where they are standing in the business market
• Positioning


  How a product or business is perceived relative to its competitors
• Niche marketing


  When a business focuses on a relatively small segment of the market
• Mass marketing


  When a business targets all the customers in the market rather than specific segments
• Unique selling proposition (USP)

  Something about your business or product which is perceived by your customers as different from competitors