1
Role of Marketing
1.1 What is Marketing?
A. Core Concepts
Notes
You should able to
memorize all core
concepts of Marketing.
B. Concepts in Marketing Management
(1) Production Concept: Consumers favour widely available and low-cost products.
(2) Product Concept: Consumers favour products offering the highest quality, performance
or innovative features.
(3) Selling Concept: Organisation should stimulate consumers to buy its products by
aggressive selling and promotion efforts.
(4) Marketing Concept: Organisational goals are achieved by determining the needs and
wants of target markets, in order to deliver the satisfactions more effectively and
efficiently.
(5) Societal Marketing Concept: Organisation goals are achieved by determining the needs,
wants and interest of target markets, and to deliver the satisfactions more effectively
and efficiently, in a way that preserves or enhances the consumer’s and society’s wellbeing.
Notes
You should able to
distinguish the core
concepts and concepts
in Marketing.
1.2 The Importance of Marketing
Goods and Services
Sellers
Market
Money
Buyers
Exchange and
Transaction
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1.3 Marketing Management Process
Marketing management process is a process of planning, organising, implementing, and
controlling marketing activities to make exchanges effectively and efficiently.
Marketing
Analysis
Internal Environment
External Environment
Company
Market Planning
Market
Implemention
Feedback
Market
Controlling
A. Marketing Analysis
The company has to analyse its external environment to find attractive market
opportunities and to avoid threats, while matching its own strengths and weaknesses.
(1) SWOT Analysis
Notes
SWOT analysis is a
major tool used in
marketing analysis.
Strengths
Weaknesses
The attributes of the organisation that
help to achieve the objective
of the marketing activities
The attributes of the organisation
that are harmful to achieving
the objective
Opportunities
The external favourable conditions that
help to reach objectives
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Threats
The external conditions which
could cause damage
to the business's performance
(2) The Boston Consulting Group (BCG) Approach
Market Growth Rate
Relative Market Share
High
Low
High
Stars
Question Marks
Low
Cash Cows
Dogs
(3) The General Electric Approach
Notes
Business Strength
Industry Attractiveness
Strong
Medium
Weak
High
BCG Matrix and
General Electric
Approach are used for
analyzing a company’s
overall product and
market situations.
Medium
Low
(4) Product-market Expansion Grid
Current Product
New Product
Market Penetration
Strategy
Product Development
Strategy
Market Development
Strategy
Diversification
Strategy
Notes
Current Market
Product-market
Expansion Grid
suggests different ways
a company can grow in
the market.
New Markets
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B. Marketing Planning
A marketing plan is to achieve the company’s overall strategic goals. Contents of a
marketing plan include:
1. Executive summary
2. SWOT analysis
3. Marketing objectives (usually in terms of market share, sales volume, brand awareness)
4. Marketing strategies
a. Segmentation, Targeting, Positioning
b. Marketing Mix Strategies
5. Marketing budget
6. Action plan
7. Control
C. Marketing Implementation
This translates the marketing plans into daily marketing actions by addressing who,
where, when, how of the plan.
D. Marketing Control
It involves evaluating the progress and the results of marketing strategies and plans, and
taking corrective action to ensure that objectives are attained.
Discussion Corner (P. 8)
1.
2.
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Marketing concept is derived from the consumer perspective that is to provide
products and services which will satisfy consumers. However, this concept ignores
the importance of social responsibility of a company inducing problems such as
environmental pollution, affecting the health of consumers and poor social climate.
The best example to illustrate it is the high-fat, high-salt and low-fiber content food
provided by some fast food restaurants. Though the food is delicious, however, frequent
consumption would lead to problems such as heart disease and obesity.
The company holding this concept improves the quality of food as well as launch
healthier products so as to fulfill the promotion of healthy life by the government.
Discussion Corner (P. 10)
1.
2.
Marketing tasks are not necessarily carried out by a single department. However,
management staff in the company should acquire marketing knowledge so as to help the
company to expand its marketing development successfully and staff are responsible for
the marketing tasks.
Schools, hospitals, etc. (or other appropriate answers). In schools or hospitals, their
clients generally do not have the professional judgement to choose what would be
the best treatment for them. Therefore, satisfaction of their clients might not be their
ultimate goal.
Activity Corner (P.19)
1.
2.
3.
(1) Marketing analysis: perform a SWOT assessment.
(2) Marketing planning: deciding the marketing strategies and write a marketing plan.
(3) Marketing implementation: marketing research, selling, advertising, customer
service, etc.
(4) Marketing control: conduct a marketing audit.
Suggested keywords for searching through the Internet:
HKMA/TVB award for marketing excellence, the International Mercury Awards.
(a), (b) and (f)
Revision Exercises
A. Basic Questions
a.
1.
2.
3.
4.
5.
6.
True or False
F
F
T
F (A market is defined by the size, purchasing power and the willingness to buy.)
T
F
b.
1.
2.
3.
4.
5.
6.
Multiple-Choice Questions
C
A
B
D (There are two types of buyers in the market: consumers and organisations.)
D
C
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7.
8.
9.
C
B
A (Trend analysis uses historical data to explain the development of a pattern over time
and predict future outcomes.)
10. D
11. D
12. A (Nowadays, companies are undergoing more and more pressure in social
sustainability.)
c.
1.
2.
3.
4.
5.
6.
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Short Questions
Marketing analysis: Analyse the internal and external (macro and micro) environment
of the company. One of the analysis models is SWOT analysis. (1 mark)
Marketing planning: Develop a plan to achieve the company’s overall strategic goals.
A marketing plan should include an executive summary, current market analysis,
marketing strategy, marketing budget, action plan for implementation and control. (1
mark)
Marketing implementation: Take the marketing plan into marketing actions in order
to accomplish the strategic marketing objectives. It addresses the people involved, the
venue, the time and the operation process. (1 mark)
Marketing control: It involves evaluating the progress and results of marketing
strategies and plans, and taking corrective action to ensure that objectives are attained. (1
mark)
Due to the changes of consumers’ preferences, the advancement of technology, the
maturity of competitors, rapid changes in the market, the company needs to grasp the
needs and wants of consumers. (3 marks)
Advantage: Company only needs to consider its internal situation to decide for
production. (2 marks)
Disadvantage: The quality of products is low that customers’ needs are not fulfilled. (2
marks)
Advantage: Company could provide products with high quality to the consumers. (2
marks)
Disadvantage: The functions of products maybe too complicated that consumers may
not want it. (2 marks)
Advantage: The sale figures would bring huge amount of profit to the company. (2
marks)
Disadvantage: Over marketing practice would lead consumers buying unnecessary
products in which consumers would believe that they are being deceived and thus affect
the image of the brand. (2 marks)
Advantage: Company can provide satisfactory products and services to consumers. (2
marks)
Disadvantage: Company neglects its own social responsibilities and inducing problems
such as environmental pollution, affecting the health of consumers and the poor social
climate. (2 marks)
7.
Advantage: Company can provide satisfactory products and services as well as up hold
its social responsibilities. (2 marks)
Disadvantage: Increase in production cost. (2 marks)
8. Needs are the state of feeling the loss of basic satisfactions. e.g. hungry (2 marks)
Wants are the desires for specifics satisfiers of the deeper needs. e.g. a person who
wants to have a hamburger. (2 marks)
9. No, it is not the same - price is set by marketers and value is judged by consumers.
(1 mark) If the product can satisfy the needs of consumers or it is similar to the ideal
products consumers want, its value tends to be higher. (2 marks) Consumers will
compare the price and the value of the products. If the value is higher or same as the
price and consumers have the ability to buy it, it would trigger their desire to buy it. (3
marks)
10. A marketing department is responsible for formulating marketing strategies and to
implement the relevant tasks. (1 mark) Since marketing will be carried out by different
departments, its role is to integrate different departments to ensure that all departments
are achieving the common goals of the company. (3 marks) Marketing department
should get all the departments to think like a consumer and put consumers at the centre
of the company’s activities. (2 marks)
11. Marketing concept mainly focuses on the needs and wants of target markets and the
desired satisfaction to consumers, while societal marketing concept considers an
additional factor: preserving or enhancing the consumer’s and society’s well-being. (2
marks)
12. In order to attract more consumers to buy new mobile phones, mobile phone
manufacturers should put more resources on the promotion of the products so that some
potential customers may buy one. As the products have already been manufactured, they
have to be promoted and sold in the short term. Otherwise, there would be too much
product storage causing difficulties to operations. (2 marks)
B. Long Questions
Question 1
Difficulty:
Key words:
Action words:
(P: easiest, PPPP: most difficult)
PP
Marketing concept, Supermarket in Hong Kong
Explain and illustrate
The question consists of two parts. In the first part of the question, you have to explain
marketing concept and the benefits towards a company. In the second part of the question,
the core concepts of marketing concept should be discussed in details with the help of any
supermarket in Hong Kong.
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The four main concepts should be explained one by one. After explaining the first core
concept of “Target marketing” and its benefits for the business, you should then take a
supermarket as an example. For example, Park’n Shop and Wellcome are targeting to the
mass market whereas others are targeting to a more high-end market. You have to bear in
mind that you should not place too much emphasis on explaining the example. Explanation
of the concepts is most important.
Answer Structure:
• Marketing concept: If a company wants to earn profit, it must define the needs and
wants of its target consumers. The company then uses a more effective and efficient
way as compared to its competitors to satisfy consumers. There are four key elements in
the concept: target market, needs and wants of consumers, overall marketing operations
and profit. (4 marks)
•
Use supermarket as an example:
• Target marketing: mass market
• Needs and wants of consumers: understand the lifestyle and the habit of
consumers.
• Integrated marketing operations: integrated different departments, e.g. purchase,
warehouse, logistics etc.
• Profit (4 marks each)
Question 2
Difficulty:
Key words:
Action words:
(P: easiest, PPPP: most difficult)
PPPP
Marketing Myopia, consequences, avoid
Explain with examples, suggest ways
This is a very difficult question. You need to understand “marketing myopia” very well to
answer this question. The first part of the question asks what the consequences of having
“marketing myopia” are, that is, too much focus on the product offered to market. You should
be able to explain the impact on consumer satisfaction and how it could make the company
neglect potential competition in the market.
The second part of the question asks for the ways company could adopt in order to avoid
marketing myopia. Marketing is about understanding consumers’ needs and wants. Merely
focusing on the product could not help the company to think of how to bring more values to
consumers. The best way to avoid marketing myopia is to focus on consumers all the time.
Therefore you should be able to suggest ways such as doing marketing research or analysing
competitors’ offerings. Moreover, consumer preference may change over time; the company
needs to reposition the brand so that to anticipate the change of consumer tastes.
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Answer Structure:
(a) If a company devotes too much to the improvement of products rather than consumers’
needs, it may suffer the “marketing myopia” stated by Theodore Levitt (1 mark) (1
mark for the example)
The consequences:
• The company puts too much resources on improving the products, however it may
not bring values to the consumers.
• The company does not pay attention to the change of consumers’ preference.
• Neglect other products that maybe a threat to the company, and eventually the
company is being eliminated in the competition. (3 marks each)
(b) • Conduct market research to understand the needs of consumers
• As time changes, re-position the products, change the strategies in target markets.
• Analysis products and strategies of competitors frequently
• Emphasis recourses on products innovation
(3 marks for each suggestion, max. 9 marks)
Question 3
Difficulty:
Key words:
Action words:
(P: easiest, PPPP: most difficult)
PP
Marketing plan, imported story books
Design, briefly describe
The question asks you to design a marketing plan for a market yet to be explored. Other than
plainly explaining the content of marketing plan, you have to apply the concepts in the story
books market for children. Since these books are imported from the United States, it could
be assumed that the books are in English and the influences from parents in choosing these
types of books are significant. This would affect how the company distributes and promotes
the books.
You have to think about how to segment the book market. Primarily children books market
could be segmented by age or school grades. On the other hand, schools could be a very
substantial market. Not only school libraries buy books, sometimes teachers may also
recommend books to students. You need to be observant and have more understanding
towards the operation for the business world. Being creative in answering this kind of
questions would also help.
Answer Structure:
1. Executive summary (1 mark)
2. SWOT analysis (4 marks)
3. Marketing strategies for the targets: segmentation, targeting, positioning
(2 marks)
4. Marketing mix strategies: product, price, promotion, place (10 marks)
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5.
6.
Marketing budget (1 mark)
Action plan (2 marks)
Question 4
Difficulty:
Key words:
(P: easiest, PPPP: most difficult)
P
Core concepts of marketing, diagram, steps in
marketing management, role of marketing department
Action words:
Briefly explain, describe
Although this is a straightforward question, you need to remember all the core concepts
involved in marketing. It is very important that these concepts are not to be mixed up with
the concepts in marketing management. You may use Kee Wah Bakery as a reference to
answer the question. The diagram should include all these concepts, with consumers’ needs
and wants at one end and marketers at the other end. The second part requires you to write
the marketing management process.
The third part asks the role of marketing department in the company. Marketing department
needs help from other departments in order to carry out all the marketing activities. However,
marketing department has to take the lead in formulating the marketing strategies and seek
cooperation from others. This helps the company to serve consumers well.
Answer Structure:
(a) • Needs, wants, demands, products, value, cost, satisfaction, exchange, transaction,
relationship, market, marketer and marketing. (1 mark for each point with
explanation)
• These concepts can be illustrated by the diagram on page 3. (1 mark)
(b) • Marketing analysis
• Market planning
• Marketing implementation
• Marketing controlling
(1 mark for each point with explanation)
(c) • Provide the products with satisfaction for the market and customers.
(1 mark)
• Set the marketing strategies. (1 mark)
Question 5
Difficulty:
Key words:
Action words:
12
(P: easiest, PPPP: most difficult)
P
Marketing plan, consumer behaviour, difficulties in
promoting
How would you design, analyse
The first part of the question asks you to describe how you would design a marketing plan.
Because it asks about “How”, you need to describe the marketing management process and
design a marketing plan. The new features added would mean a higher price for the phone.
Therefore the positioning should be coincided with the marketing mix strategies to formulate
a sensible marketing plan.
The second part is about the difficulty in changing the behaviour of consumers in using
mobile phones. It is important to note that the focus is not the difficulty in promotion. You
have to analyse whether the new features of the phone in downloading e-books and watching
high-density television programmes could be understood and adopted by consumers.
Answer Structure:
(a) The marketing process is defined as the following four steps:
• Marketing analysis
• Marketing planning
• Marketing implementation
• Marketing control (1 mark for each point with explanation)
• SWOT analysis (2 marks)
• Establishment of the major marketing target, segmentation, targeting, positioning
(2 marks)
• Marketing mix strategies (4 marks)
• Marketing budget, action plan (2 marks)
• Marketing control (2 marks)
(b) • Due to the convenient transportation network and short travelling distance,
consumers do not have the habit of watching television programmes outdoors.
• The choice of Chinese electronic books is very limited and book lovers still like
buying books. (2 marks for each point)
Question 6
Difficulty:
PPP
Key words:
Marketing management process, large multinational
corporations, small businesses
Action words:
Compare and contrast
(P: easiest, PPPP: most difficult)
You are asked to compare and contrast the differences between large multinational
corporations and small businesses in their marketing management process. You need to
outline each step in the process and compare these two different scales of business against
each of the steps.
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It is very common to think that large multinational corporations have more money and
therefore they can plan easily. However, there is a biased perception. Large multinationals
corporations have to manage a much large scope, involving operations in different countries.
They need to face diverse cultures and economies, and therefore they have to analyse the
environment carefully and formulate different marketing plans for these countries.
On the contrary, small businesses generally do not believe in environmental analysis or they
do not know how to conduct it systematically. Therefore, marketing planning to them is not a
systematic activity which to be reviewed often.
Answer Structure:
MNCs
More
thorough
and always
••
supported by market research (2
mark)
SMEs
Could
very
often be driven by
••
intuition and past experiences
(2 mark)
Scope / objectives
•• Cover a larger scope and also
concern with non-monetary
performances, e.g. brand
awareness, satisfaction level.
(2 marks)
•• Usually concern with the sales
figures only (2 marks)
Marketing budget
•• More systematic in setting budget, •• Generally no system in setting
e.g. objective and task method (2
budget, may use affordable
marks)
method (2 marks)
Action planning
•• Will be planned in detail (2 mark) •• Not very specific and detailed
(2 mark)
Marketing control
•• More methods are employed
to control the effectiveness of
marketing program, e.g. market
research, POS systems (2 marks)
•• Weak in analysing the
effectiveness of marketing
program, because they have less
resources to measure the results
(2 marks)
Time frame /
frequency
•• Conducted regular, once a year
for tactical plans and once every
two or three years for strategic
plans (2 marks)
•• Conducted irregularly depending
on whether they have the budget
and their priorities (2 marks)
Environmental
analysis
(4 marks for each comparison, max. 20 marks)
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Case Study
1.
Strengths
• Consumers believe that Nintendo product is simple and user-friendly. Child and elderly
are able to master it.
• Nintendo puts effort on developing electronic games.
Weaknesses
• Due to lack of capital, it cannot compete with Sony and Microsoft in hardware
development.
• There is a little choice of Nintendo games in the household electronic games market.
Opportunities
• Put huge amount of resources on hardware development for the direct competition with
Sony and Microsoft.
• Owing to the aging population, develop games and consoles that can easily be handled
by elderly.
• Position Nintendo as a home video game console with simple operations, and launching
the relevant games.
Threats
• Game software developers are unwilling to launch any new games for Nintendo.
• The idea of “Functional console” used by Sony and Microsoft are taking up the market.
• Consumers believe that Nintendo is a game only played by children.
2.
Nintendo adopts the marketing concept. By understanding marketing behaviour,
Nintendo analyse the phenomenon and changes of consumers in playing electronic
games. It found that consumers cannot afford much time on playing electronic games,
thus hoped to design a console that consumers would put it at home to let family
members play it everyday. Those games played with are mini-games which do not
required much time playing it. Nintendo successfully expanse its target market from
individual to families. It is no longer targeted in teenager, youngsters or children. It also
let consumers experience fun in playing games instead of the frustration brought by
complicated games.
On the contrary, Sony and Microsoft are suffered from “Marketing myopia”. They are
over-emphasis on products improvement and do not notice the changes of consumers’
behaviour. The function of hardware is more and more advancing, but the players may
not have sufficient technical support for it. As the design of the game is more and more
complicated, reaction of players needs to be faster and it demands long period of time
to move from levels to levels to complete the game. Thus, this make fewer and fewer
consumers feel interested in playing it.
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3.
By conducting the SWOT analysis, the company can understand the strength, weakness,
opportunities and threats it may face. Also, it can compare with competitors in the
aspects of sale, the quality of the game console and the style of new games so as to meet
the needs and wants of consumers and deliver the desired satisfaction more effectively
and efficiently.
In order to do better than the competitors, the company should include advanced
function such as acoustic control and multi-player functions. It should invest more on
the research and development of the game console and the design of games. Together
with the cooperation with the manufacturers of computer chips, it can instantly provide
new products to fulfill the requirements and expectation of consumers in the aspects of
speed and technical limitations.