The Role of Marketing
Unit 4.1
Define marketing and define its role with
other business functions (AO1)
Find a definition of
marketing
TASK
The management process involved in
identifying, anticipating and
satisfying consumer requirements
profitably.
Chartered Institute of Marketing
Marketing is “the management process involved in identifying, anticipating
and satisfying consumer requirements profitably.”
This is a helpful definition because of what we can learn from it;
Management process = responsibility for decision making
Identifying = i.e finding out the needs and wants of customers
Anticipating = predicting what might customers want in the future
Satisfying = customers are more likely to become loyal is they are content with
price, availability and quality
● Profitably = marketing is ultimately about earning money
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Definition and nature of marketing
The marketing department of an organisation tends to have four main or generic
objectives
● Ensure that the right products are supplied to fulfil the needs and wants of
customers
● Set the right price so customers can afford to buy the product (and to ensure that
they do not buy from a rival business)
● Distribute (or place) the products conveniently for customers to buy the product
● Ensure that there is adequate and effective promotion to convince customers to
buy the firm’s products
DISCUSSION TASK
Marketing is fundamental to the success
of a business, however it alone does not
ensure success.
How will the marketing department
work with other business functions?
In your discussion try to see how each
function a) works with marketing b)
may come into conflict with marketing
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Explain the difference between commercial
marketing, social marketing and social media
marketing
Interpretation Task: who, why, audience etc
Commercial marketing
Is the use of marketing strategies to meet the needs and wants of customers in a
profitable way.
Social marketing
The use of mainstream marketing methods to achieve the benefits of social change
Professor Philip Kotlet (1971) is credited as the founder of social marketing.
Examples; AIDs awareness, anti-smoking, anti-drink-driving and unwanted teenage
pregnancies
Clients of social marketing agencies tend to be non-profit organisations and
government organisations, and sometimes the CSR sections of businesses
Some main differences between social marketing and
commercial marketing
Purpose: selling for profit versus attempt to persuade a desired change in social
behaviour
Benefits: to satisfy individual needs and wants versus satisfies the needs and desires of
the general public
Main users: private sector versus government and non-governmental organisations
(generally speaking)
Social media marketing
Using social media such as Twitter, Instagram,
Snapchat, Facebook etc to connect with your
target audience. Modern technology also allows
business a phenomenal amount feedback from
social media as well. Trends and habits for example
can all be closely monitored and analysed. What do
they say? ‘Information is power’
What’s your opinion on Instagram's recent update?
Live stories? Like or dislike? Is it a lame snapchat?
Read this great article from the FT
Distinguish between market orientation
versus product orientation
Explanation
Market orientation
Product
orientation
Pros
Said to be outward
looking. A focus on
customer needs.
Making products that
the business can sell.
1)
Said to be inward
looking. Focus on
selling products that the
business makes. Many
hi-tech products started
this way.
1)
2)
Cons
Might lead to greater
flexibility; firms can
respond quickly to
changes in the market.
Lower risk as the
business can be more
confident that their
product will sell.
1)
Are often high quality
products, and as a
result can be branded
and customer loyalty
gained.
1)
2)
2)
The market research
needed can be very
expensive.
No guarantee it will
work.
Uncertainty that the
product will sell
Has a high failure rate
as the ‘market’ may not
want the product, or
e.g. fashions and
trends change
Calculate market share
Market share =
Firm’s sales revenue
Industry’s sales revenue
x 100
For example, if a firm’s annual sales revenues
are $100 million in an industry with annual sales
of $400 million, then it’s market share is 25%
NB this formula is not on the formulae sheet
Define the differences between the marketing
of goods and the marketing of services (A01,
A02)
Q. What is the difference between marketing goods and
services? Provide examples to illustrate your answer
There are similarities and differences in the marketing of goods and services. For
example, both use promotion to build brand recognition, brand awareness and trust.
The differences between the marketing of goods and services include but is not limited
to the following characteristics;
Intangibility
Inseparability
Heterogeneity
Perishability
Note: we return to these issues in 4.5 and 4.6. This is just an introduction.
Intangibility
Whilst goods are tangible (physical), services are intangible. Marketers face a challenge
to communicate the benefits of the service, e.g. why should customers use a particular
hair salon? The purchase is based largely on trust. By contrast, marketers tend to have
less challenges selling a physical product with physical attributes that customers can
inspect before buying.
Inseparability
Services are consumed at the time of purchase, e.g. bus ride, watching a movie at the
cinema or having a massage at a health spa. Inseparability means it is not possible to
separate the production and consumption of a service. Marketers strive to ensure the
staff are well trained at providing outstanding and consistent service.
Heterogeneity
It is common to mass produce standardised (homogeneous) goods such as
smartphones, books or soft drinks. However, services are heterogeneous because of the
experience is different for different customers. If customers experience poor customer
service, they will opt to use the services provided by other providers.
Perishability
Unlike goods, services cannot be stored. For example, each bus, cinema or airline seat
that is empty means a loss in potential revenues to the business. By contrast, most
goods are durable to some extent. For example, coca-cola is massed produced and
stored in warehouses before distribution to wholesalers and retailers so can be
marketed using international marketing strategies (unit 4.7)
Describe the elements that characterise the
market in which an organisation operates
Markets are where buyers and sellers meet
Some key ideas;
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Market size, normally measured in sales
revenue
Customer base, total potential number of
customers. Can be used to measure market
size
Barriers to entry, obstacles that determine
the number of suppliers in the market, e.g.
large set-up costs, legal restrictions, patents
Competition, the degree of rivalry within a
particular market
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Geographic characteristics, e.g. area, country,
region, or global
Demographic characteristics, e.g. gender,
age, ethnicity and religion
Market growth rate, refers to an increase in
the size of a market per period of time,
usually a year, e.g. sales revenue grows from
$100b to $110b there are has been 10%
growth. Growth normally attracts news
suppliers to the market
Seasonal and cyclical characteristics, e.g.
academic year and textbooks, skiing holidays
Discuss the importance of market share and
market leadership
There is a positive relationship between market
share and profits, although the firm with the
largest market share is not the necessarily the most
profitable.
Market share can be increased by ideas such as;
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Market share can lead to economies of scale.
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Those firms with the largest market share are often
referred to as market leaders, e.g. Nike and Adidas
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Market leaders are often dominant and have better
price setting ability and are less threatened by
competition
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Promotion of brands
Product development, improvements and
innovation (unit 5.6)
Motivation and training of the workforce
(units 2.4 and 2.1)
Establishing property rights, ie.e.
Trademarks, copyrights and patents, (unit
3.4)
Use of more efficient channels of
distribution (unit 4.5)
Market concentration
This is a measure of 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.
For example a 3-firm concentration ratio of 98%
means the top three firms have a combined market
share of 98%.
This example would not be a very competitive
industry as all other firms account for just 2% of
the total sales revenue of the industry.
RESEARCH TASK
Search Engines
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Google estimates range between 65-80%
Smartphones?
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Apple 40%
What can you find our for us?
Compare and contrast marketing objectives of
for-profit organisations and non-profit
organisations
Guessing task: what are some for profit and non-profit
marketing objectives. Write them up on the big boards
FOR-PROFIT
NON-PROFIT
Increased sales revenue
To build membership (support) and to connect
with new donors
Higher market share
Increased market leadership
Improved product and brand awareness
Developing new products
Enhanced brand perception
To generate awareness of the NPO’s cause
To improve brand recognition of the NPO
To create positive attention to the NPO’s
operations
To demonstrate the value of the NPO to the local
community or society in general
Evaluate how marketing strategies evolve as a
response to changes in customer preferences
Why might marketing strategies evolve?
Examples include;
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Changing consumer tastes
Shorter product life cycles (unit 4.5)
Internet and mobile technologies have made
change quicker than ever
Competitive rivalry
Globalisation (unit 4.7)
Examine how the concepts of innovation,
ethics and culture influence marketing
practices
Determining whether a specific marketing campaign is ethical can often be rather
subjective. What is offensive to one person or group might not be to another.
The use of unethical marketing, whether deliberate or otherwise is a high risk strategy.
Misleading or offensive marketing can backfire and make customer boycott the
business.
Governments are also expected to protect the general public from immoral business
practices and often issue regulations and monitor industry.
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