CHAPTER SIX

ROLE OF MARKETING

Topic 2 Marketing

http://resources3.news.com.au/images/2011/09/07/1226131/677651-queensland-is-facing-a-milk-shortage.jpg

http://resources0.news.com.au/images/2011/02/10/1226003/990464-milk.jpg

http://www.google.com.au/imgres?q=milk+types&um=1&hl=en&biw=1152&bih=659&tbm=isch&tbnid=0z08tL0g6Si6gM:&imgrefurl=http://www.dailymail.co.uk/news/article-466094/Tesco-stocks-38-different-varieties-milk.html&docid=Zbipp4qGCtdNTM&imgurl=http://img.dailymail.co.uk/i/pix/2007/07_01/milkGraphicDM0407_600x612.jpg&w=600&h=612&ei=YSoWT6SZMMnRmAXJ3-j-CQ&zoom=1&iact=hc&vpx=714&vpy=134&dur=4071&hovh=227&hovw=222&tx=83&ty=128&sig=115141124347537837707&page=1&tbnh=141&tbnw=138&start=0&ndsp=17&ved=1t:429,r:3,s:0

A definition:Involves the process of a business developing a product and implementing a series of strategies aimed at correctly promoting, pricing and distributing the product to a core group of customers.Successful marketing aims to connect the business with the customer by satisfying a need. I.e. adopting a customer-focused ethos or orientation, meaning that it is a process where a business attempts to identify customers’ wants/needs (through market research) and then it plans, prices, promotes and distributes the best product or service to the market. Thereby, creating a competitive advantage.A business needs to create products that customers want to buy. Successful marketing activities can lead to not only more choices of goods and services for consumer, which improve living standards, but marketing also leads to:

increased customer awareness of products, market share and therefore; and

more sales revenue and profits are earned by the business.

Marketing

The strategic role of marketing goods and services

The strategic role of marketing – refers to the important role that the marketing function of a business has in helping a business to meet its goals/objectives e.g. goals of increasing brand awareness amongst target markets, increase market share, sales and profits.

The marketing activities of a business also have a strategic influence on our economy and society, in that marketing activities provide consumers with a choice of goods, create employment opportunities and improve our standard of living.

Choice

Marketing provides consumers with a choice of goods or services to select

from. For example think of all of the choices you have when you go

shopping for a loaf of bread or carton of milk. Think about the options you

have when buying a carton of milk (dairy, soy, rice, “lite”, skim, added

calcium, iron, organic and then there is cheap milk at $2 for 2 litres versus

more expensive brands). Or, “Would you like white bread, brown bread,

high fibre bread, toast slice, thin slice…!”.

Businesses use marketing: to differentiate themselves from their competitors and these

provide consumers with greater choice when purchasing a product; and

also, to establish a competitive advantage from other businesses by offering customers a choice in relation to the price, product quality and features of products. E.g. Would you like white bread, brown bread, high fibre bread, toast slice, thin slice…! Brands: Tip Top, Uncle Toby’s, Helgas & Bergen.

Task: is there such a thing as too much choice? Write down your experience of when you may have felt this to be true?

Strategic role of marketing (cont.)

Standard of livingBusinesses will often develop and market products that improve our lifestyles and enhance standards of living. E.g. a prolific number of milk varieties available. Task: Name other goods or services that improve an individual’s quality of life.

Employment

Businesses provide an important source of jobs for many Australians. To

provide a product to consumers, businesses must employ labour to assist in

transforming input resources into finished products. Labour is also required to

sell these goods and services. Task: look up an advertisement for a marketing

manager www.seek.com.au . Summarise the features of the job.

Brand awareness

Brand awareness refers to the extent that customers are aware of a business’s

product, brand name and its features. Task: List all the products you have

bought in the last week by brand name. Why did you choose each product over

other competitors’ products?

Strategic role of marketing (cont.)

The “supermarket wars”

February 07, 2012

Market share

Definition: Market share is the percentage of total sales a business has compared with

its competitors within a particular market.

Businesses will attempt to build their market share by developing, promoting and

pricing products to a standard that will give the business more customers than its

competitors, raise sales and profits and create more brand awareness of amongst

customers. E.g. Coles and Woolworths spend a large sum on advising in the print

media and on television to promote the products sold in their stores and build

market share. Task: Who is winning the “supermarket wars”. Read the article to find

the answer: “This time it's personal as Coles and Woolworths fire artillery”

http://www.theaustralian.com.au/media/marketing/this-time-its-personal-as-coles-

and-woolworths-fire-artillery/story-fna12mff-1226263164398 From: The Australian

February 06, 2012

1. Note the trends in the amount spent on marketing for both Coles and Woolworths.

2. List all the marketing strategies from the article.

3. Who are the winners and losers in this “war”.

Strategic role of marketing (cont.)

1. Read the attached handout page 101 to 102.

2. Write a definition of “interdependence with other key functions”.

3. Explain TWO ways finance and marketing are interdependent.

4. Outline how marketing influences operations.

5. Describe how marketing decisions can affect human resource staffing decisions. Use an example.

6. Watch one of the latest SuperBowl television advertisements. http://www.superbowl-commercials.org/14261.html

a) What type of marketing strategy is this? Which ”P”?

b) Describe the effect the advertisement would have on the operations and finance functions of the business.

Interdependence with other key functions

Approaches to marketing

Over the past 100 years approaches to doing business have changed from focusing on the product to focusing on the customer. The development of marketing can divided as follows:

Production Orientation

Sales Orientation

Marketing Orientation

1820’s – 1920’s

1920’s – 1960’s

1960’s - present

Marketing approaches are the different philosophies or ways of thinking that businesses may use when marketing their products. There are three core approaches to marketing:

1. Production approach e.g. Henry Ford

Relies on the view that consumers base their purchasing decisions on the quality of the product and businesses will therefore focus on providing good quality products to meet customers high standards. Marketing was to simply take orders and deliver products.

2. Selling approach

The selling approach considers the skills of selling to be the most important task of marketing. An emphasis on selling and advertising. Based on the belief that a business will be successful in selling a product if it is able to promote the benefits of the product to its target market. Saw the rise of the salesman and use of advertising to sell products.

Approaches to marketing

3. Marketing approach

Began with marketing boom after WWII. First time most families had discretionary income = money available after buying basic necessities.

The basis of which is that the customer is at the core of all business activities. It involves adopting a customer orientation with the belief that all actions from product design, pricing, distribution etc should be aimed at satisfying the needs of the customer.

Approaches to marketing

Consumer markets consist

of the following markets:

Mass markets – apply to

goods and services that

appeal to all types of

consumers.

Market segments – where a

business chooses to focus on

only one area of particular

market.

Niche markets – a smaller

section of a market

segment.

Consumer markets