IB Business &
Management
Unit 4.1 The Role of Marketing
Learning Outcomes
To understand:
• Marketing and its relationship with other business functions – A01
• The differences between marketing of goods and marketing of services
• Market orientation versus product orientation - A02
• The difference between commercial marketing and social marketing – A02
• Characteristics of the market in which an organization operates – A02
• Market share - AO4
• The importance of market share and market leadership - AO3
• The marketing objectives of for profit organizations and non-profit
Organizations - AO3
• How marketing strategies evolve as a response to changes in customer
preferences – A03
• How innovation, ethical considerations and cultural differences may influence
marketing practices and strategies in an organization – A03
Central Question
Have you ever
purchased anything
that you don’t need
or want?
WHY?
Definition
“Marketing is the management
process involved in
identifying, anticipating and satisfying
consumer needs and wants
profitably.”
The Chartered institute of Marketing.
Marketing & Other Business
Functions
•
•
•
•
•
Marketing is one Business Function.
What are the others and how might they be:
Affected?
Influenced?
Discussion points
Related?
• Can we link this to our case study companies?
• Are the relationships between the functions as
important for each business?
Finance & Marketing
• Marketing is an expense, therefore Finance and
Marketing functions need to work together to:
• Set budgets
• Set forecasts
• Link to company objectives e.g. to increase market
share
Human Resource
Management (HRM) and
Marketing
• Marketing can influence demand and sales.
Therefore these two functions need to work
together closely to:
• Ensure demand can be met (staffing, distribution)
• Ensure the business has the necessary skills to
deliver the quality expectations and to maximise
efficiency/productivity
Operations Management and
Marketing
• The marketing function identifies the needs and
wants of the customer.
• This then needs to be communicated, planned and
discussed with operations to ensure:
• Quality standards
• Meeting of customer expectations
• That production is viable – do they need specialist
machines?
• That scale is viable – can they meet/satisfy potential
demand?
Task – 3 mins then feedback
• Choose one of our companies.
• Research and explain one example when other
business functions needed to liaise with the
Marketing function
•
•
•
•
•
Perhaps consider:
Why it was necessary
What do you think they discussed?
The key factors to make a decision?
What was the decision and why?
A Good, A Service or Both?
Marketing of Goods vs.
Services
GOODS
SERVICES
Tangible
Intangible
Can be returned
Can’t be returned (an experience)
Can be stored and consumed
Can’t be stored
Ownership (asset)
No Ownership – just an experience
Easily comparable – e.g. features
Difficult to compare (objectively) as
different customers have different
expectations and different
experiences.
Mainly use of the 4 P’s
Use of the 7 P’s
Task in Pairs – 5 mins
• Choose a business that produces goods or products
• And a business that provides a service.
• Compare and contrast the different approaches
used in their marketing
Product v Market Oriented
PRODUCT ORIENTED
“ a business approach that focuses on making the product first
before attempting to sell it”
MARKET ORIENTED
“ A business approach of first establishing consumer demand
through market research before producing and selling a product”
Market Orientation vs
Product Orientation
Market Oriented
This approach is an outward
looking one. Main focus is on the
consumer in order to:
• Identify
• Design
• Develop
• Supply products to meet
their needs and wants of
customers.
Product Oriented
It is inward looking.
The focus is on making products that a
business can sell, rather than selling
products that they can make.
The focus is on selling products that a
company makes, rather than making
products they can sell.
If you ignore your customer, you will
lose competitiveness.
Businesses hope the customers will buy
their product.
Market Oriented
STRENGTHS
LIMITATIONS
Market research reduces risk of
failure.
Market research can be costly,
time consuming and could
produce unreliable data if not
conducted properly (bias).
Understanding the market means
the business can respond faster
and more effectively to market
changes.
Needs and wants continually
changing  businesses may find
it hard to satisfy these
consistently with limited
resources.
Understanding the competition
can help a business to
differentiate its products or
services.
Future uncertainty may have
negative impact on developing an
effective market planning
strategy.
Product Oriented
STRENGTHS
LIMITATIONS
Associated with production of
high quality products e.g. Bugatti
Veyron, Apple products.
Potentially very risky if the
business ignores the needs of the
market – (Blackberry, Tesco).
Can build a reputation in markets
that have slow change and could
benefit from Intellectual Property
Protection (patents).
Research and development can be
very expensive and possibly
useless if not addressing
consumer needs or wants (Sinclair
C5).
It controls own activities and
believes customers will buy its
products.
PESTEL factors could be very
influential and if not monitored
could be very detrimental to the
business.
What about our Companies –
Product or Market Oriented?
So…What have we learnt so
far?
Write your answers (or any
questions) on a post it and stick on
the board 
Commercial Marketing vs
Social Marketing
COMMERCIAL MARKETING
“Marketing activities that determine consumer needs
and wants before using appropriate strategies to
market the product”
SOCIAL MARKETING
“A marketing approach aimed at influencing a positive
change in individual behaviour and improvements in
societal well-being”
Commercial Marketing
Should
Governments
tax “unhealthy
foods”?
No moral judgments needed – just
satisfying needs & wants
EE/TOK:
But should business
have a responsibility
to consider the
morals or ethics e.g.
obesity
Social Marketing
ADVANTAGES
• Competitive
advantage – socially
responsible
• Added value –
premium prices Fair
Trade, organic
Ensures businesses make good
marketing decisions based on
consumer wants, the firms
requirements & society’s
interests & welfare e.g. public
health campaigns
Can you find
examples..?
Thoughts…
Could a business use
both Commercial
and Social
Marketing?
Can you think of or research any
examples.
Social Media Marketing
(SMM)
SOCIAL MEDIA MARKETING
“The use of the Internet through social networking
websites to market a firm’s product or service”
SMM Benefits:
• Allows for direct customer feedback
• Interactivity – could enhance the AIDA principle
• Low cost way of reaching large target audience
(global)
• Enhance and promote Brand Image
Usually supported
by traditional
Above the Line
methods.
Market Characteristics
A MARKET IS:
“An arrangement where buyers and sellers exchange
goods and services”
MARKET SIZE:
“The total sales of all businesses in a given market”
A MARKET CAN BE MEASURED BY:
• Volume – number of units sold
• Value – Total revenue gained from sales
Questions
• What is the size of the global smartphone market by:
• Volume
• Value
How can we
calculate this
also?
To what extent is it important for a business to
understand whether their market is growing or
declining?
Market Growth
“The percentage change in the total market size
over a period of time”
SOME FACTORS AFFECTING MARKET GROWTH:
•
•
•
•
•
•
•
•
Economic cycle
Competition from new entrants
Social Trends
Technological changes
Laws
Beliefs
Marketing
Pressure groups
Market Share
“The percentage of one firm’s share of the
total sales in the market”
Market
Share %
=
Firms Sales
Total market
sales
CAN YOU MEASURE MARKET SHARE BY VOLUME
AND VALUE?
x100
If so, could
this affect
how the
market leader
could be
judged?
Can Market Share be
misleading?
For example:
Is the same time period used?
Are the types of products the same?
Market Leader
“ The firm with the highest market share
in a given market”
Benefits:
• Higher sales suggesting higher profits
• Economies of scale (but perhaps diseconomies also)
• Being market leader can enhance Brand loyalty and act
as a promotional tool
But…sometimes market leaders get complacent
and go from Hero to Zero! Why does this happen
and can you think of any?
Marketing Objectives
“The goals or targets a business aims to achieve
through the marketing function and which complement
the organisation’s overall strategic objectives”
FOR PROFIT
ORGANISATIONS
NOT FOR PROFIT
ORGANSIATIONS
Will they be
the same?
Marketing Objectives:
For Profit Organisations
• To identify, design and develop marketing strategies
that will ultimately be profitable to the business
• Achieved by applying the right mix of the P’s
• Mostly Market oriented because want to meet needs
and wants PROFITABLY!
Marketing Objectives:
Non Profit Organisations
• Use marketing to address social issues
– Environment
– Health
– Poverty
AIM:
To inform and try to bring about behavioural
change
Key Problem = Limited financing affecting
marketing budget. Many NPO’s use SMM to raise
awareness and funds for their causes – why?
What ways could NPO’s gain
free publicity?
• Celebrity endorsements/ambassadors
• Government funding
• Links with Private for profit firms to improve their
CSR initiatives
• Social media campaigns
• Any others?
Do Customer Preferences
Change Over Time?
What can
happen if a
business does
not stay abreast
of customer
preferences?
BMW Case Study
• To what extent has BMW’s marketing strategy
evolved as a response to customer preferences?
KEY CONCEPT LINKS:
• Change
• Culture
• Globalization
• Innovation
• Strategy
Could we
make a Paper
2 Section C
20 mark
question out
of this?
Innovation, Ethics and
Cultural Differences
How might these
influence
marketing
practices and
strategies?
Research & Analysis Task in pairs
Each pair to select one of our concepts:
•
•
•
•
•
•
Change
Ethics
Culture
Globalization
Innovation
Strategy
Take your concept and choose a business, a market or
a good or service (it might make sense to choose one of our
companies but you can decide). Some help/suggestions on
the next few slides
Change
When have perhaps changes in the external
environment impacted marketing strategies or
practices?
E.g.:
•
•
•
•
Legislation
Consumer tastes
Technology
Environment
Ethics
To what extent are businesses marketing their
products in an ethical manner?
Eg.
• Cigarette and alcohol companies and their
advertising
• Honest transparent campaigns? E.g. photoshopping
on adverts/billboards…
• Coca-Cola – Dasani water
• Click Here for false/misleading advertising
examples
Culture
How important is it for multinational companies to
adapt their marketing strategy to different cultures?
• Multinational companies going into new markets –
how might marketing need to be “tweaked”
• Tesco to USA – failure
• Starbucks to France – failure (but seemingly pretty
successful everywhere else – why is this?)
Globalisation
How has globalisation impacted the way that
businesses market their products/services?
Standardise, localise or…..wait for it……
“Glocalise”??
With increasingly interconnected world what
marketing strategy or approach do multinationals use?
Why?
Innovation
How does the concept of innovation impact
a. New product/service development (3D printing)
b. Promotional strategies (social networking)
For example:
• How have the movie and music industries been
influenced by the technological innovations – VCR to
DVD to MP3-5’s to streaming?
• Oil and gas industry – Fracking? (ethics of
fracking?)
• Social media – due to this traditional marketing
media becoming obsolete?
Strategy
When a business changes strategy how can this
influence marketing? For example:
• Rolex seems to have shifted from Niche to Mass
marketing – they sponsor all major events in golf,
tennis, formula 1. This must be extremely expensive.
Why these sports?
• Samsung has had a dilemma recently – faced with
declining market share, does it – compete with the
growing “budget” smartphones or does it compete
with the very brand loyal iPhones? It has chosen the
latter so how will its marketing change?
Reflection
• How does innovation, ethics and cultural
differences influence the marketing practices and
strategies?
• Post it note your reflections on the board.