The role of marketing

Chapter 24

Key definitions you must know

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

consumer wants.

Market size

$9,000,000,000(9 billion $)Population 312,000,000

$11,000,000,000(11 billion $)Population 70,000,000

Market size can be measured in 2 ways... 1.The total volume of units sold2.The total value of units sold

In this example, what method have they used?

THE TOTAL NUMBER OF

SALES IN THE WHOLE

MARKET

Market size

$9,000,000,000(9 billion $)Population 312,000,000

$11,000,000,000(11 billion $)Population 70,000,000

A business can decide whether a market is worth entering

A business can use market share to compare themselves to their competitors

A business can see if they are growing / declining within a market, this will affect the strategic decisions of the business

Market Growth

The market for coffee in the UK is saturated. There is no more room for growth, the maximum number of coffees that can be sold, are being sold.

If coffee companies want to expand, they will have to seek out new markets (Asia)

THE PERCENTAGE CHANGE

IN THE TOTAL SIZE OF A

MARKET (VOLUME / VALUE)

OVER A PERIOD OF TIME

Market ShareStarbucks

Costa

Pret

Nero

Market share % =

Business’ sales

Total market salesX 100

THE PERCENTAGE OF

SALES IN THE TOTAL

MARKET SOLD BY ONE

BUSINESS

Think... Question –

Explain how a business’ market share can fall even though sales are rising

The total market sales are increasing at a faster rate than that of

the business’ sales. Therefore competing business’ sales will be

increasing inline or exceeding the percentage increase in total

sales in the market. This is often typical of relatively new products

to the market, such as the tablet. Total tablet sales2011 – 12,0002012 – 25,000Apple

2011 – 10,0002012 – 15,000

Samsung2011 – 2,0002012 – 10,000

Consumer & Industrial markets

Consumers markets for goods & services

bought by the final user (consumer)

Industrial markets for goods & services

bought by businesses to be used in the

production process for other products

Market orientated & Product orientated

It is 1968, and a research company set about finding a new and improved super glue, one that would NEVER become unstuck

It is my job to invent a super glue,

Market orientated & Product orientatedUnfortunately the glue that the scientist invented was not

sticky at all, however it never lost its stickyness...

You rubbish scientist, you invented a

weaker-glue not a super glue

Will I ever invent a good product?

Market orientated & Product orientatedThen in 1972, a manager from another research business

came upon the sad scientist...

I’m going to help you sell your invention, now... Lets think, how could we sell a weak glue that never loses

its stickiness?

Market orientated & Product orientated

Well I use it on little sheets of paper to write notes on, which I stick to my desk...

Ahaaa, I have just the product, we will call it a post-it note, we will try sell them all over the world.

Market orientated & Product orientatedPost-it notes were a success, everybody loved the idea, the scientist

became rich and everybody lived happily ever after...

Except the scientist’s first manager, who laughed at his idea.

This is an example of product orientated,

the product came first then they tried to find

a market for the product.

Market orientated & Product orientatedIt is 1955, the 2nd world war was over, and people were starting to

enjoy increased wealth. More and more families were buying cars...

What a marvellous invention, I no longer have

to travel using a horse

Market orientated & Product orientated

Time passed...

Market orientated & Product orientatedAwwww Mannnn, I want a

car, but I can not afford the insurance and the petrol, I

wish someone would make a car that is cheap for

insurance and cheap for petrol...

I hear you...

Market orientated & Product orientated

This is an example of market orientated,

customers demand the product first, then the producers made the

product

Market orientated & Product orientated

Most businesses are usually market orientated. Market orientated is less risky, as you know what the consumer wants, so are guaranteed sales. However, your competitors also know what the consumer wants so there is increased competition.

Therefore product orientated businesses are usually the most successful, as their products are innovative and unique, different from all other businesses. Think of...

Higher Level

Asset-Led marketing

Sometime a business will listen to consumer’s demands (market orientated) but will develop a product based upon their own strengths (product orientated)

BMW do not make commercial trucks (despite a high demand for

these) they have however varied their product line, and now sell a

vast range of premium cars.

Higher Level

Social Marketing

The social marketing approach considers the demands for consumers and the effects the businesses actions would have on society.

Consumers want cheaper coffee, however Starbucks insists on

paying the coffee bean famers a ‘good’ wage. In order for Starbucks

to maintain their profit margins, the price of coffee remains

relatively expensive.

Non-profit making marketing

Marketing for charities can prove very challenging. Genuine charities

have clear fund raising objectives – to support their cause and to ensure

the money is raised in the most effective way. A marketing department

for a charity must consider:

•How does the public view our charity, and which type of people are most

likely to donate

•The best, most cost effective way to commutate with donors

•Assess the effectiveness of promotions and improve their effectiveness.

•Adhere is unusually high ethical standards

•To maintain public interest

Theory of knowledge

To what extent is it ethical for a charity to spend

millions of dollars on effective promotion? [10]

Oxfam claim that for every £1 donated, 17p is kept within the organisation. However recent reports have shown that actually the figure is closer to 50p. (so for every 50thb donated, only 25thb will get to the end cause)

http://www.youtube.com/watch?v=eQK6ODxDfDYhttp://www.youtube.com/watch?v=zwPPl1f787Y