1 Marketing Intro Nov 2008

MARKETINGMARKETING

04/08/23 HBM - Marketing 2

What is a market?

A MARKET - meeting place that allows buyers and sellers to exchange goods and services.

Example of markets are - shops, internet, newspapers, mail order, telephone, car boot sale

There are 2 main classifications of a market consumer market industrial market


Consumer Markets• Consumer markets - are made up of

individuals who purchase goods/services for personal or domestic use.

• Consumable goods (convenience) (non-durable) - eg, food, cosmetics, magazines

• Durable goods - eg, cars, televisions, clothes

• Speciality goods – cosmetics, fashion items, luxury goods


Industrial markets - organisations which purchase goods and services to use in the production of other goods and services.

Consumable goods - eg, raw materials

Durable goods - eg, machinery and equipment

Industrial Markets


Marketing Task 1

Distinguish between a consumer market and an industrial market.

(1 mark)


Solution

• A consumer market is made up of individuals who purchase goods/services for personal or domestic use whereas an industrial markets is made up of organisations which purchase goods and services to use in the production of other goods and services.


Role and Importance of

MarketingIt is the way the company

communicates with the customer

However different organisations have different needs

Small business Multi-nationals Charities Local councils Government


Marketing for the public sector

• Will use market research to find out what community needs

• Advertise their services through newspapers and their own publications to inform the community of what’s available

• Develop new services based on what market research tells them the community want


Marketing in the private sector

Small businesses may not worry too much about marketing as they have close contact with customers anyway

Big businesses may lack close customer contact – so need to do more marketing

Producers of industrial goods may only have a few customers and it is easy to stay in touch with them


Marketing in the voluntary sector

• Competition for donations is highly competitive

• Have to appeal to our emotions

• Aggressive tactics

• Charities spend large sums of money on marketing to raise awareness


Marketing task 2

Describe the importance of marketing for a Local Council.

(2 marks)

Distinguish between a local corner shop’s and a plc such as Marks and Spencer’s approach to marketing.

(2 marks)

Explain why a charity such as Oxfam spends large amounts of money on marketing strategies?

(2 marks)


Solution 1

• A local council will use market research to find out what their community needs are.

• They will advertise their services through their own publications to promote services to local people.


Solution 2• A local corner shop would not spend as much time or

money on marketing because it continues to meet its customers face to face so continues to have direct communication with them whereas a large organisation like M&S are unlikely to meet their customers so rely heavily on marketing to communicate.

• A local corner shop may offer promotions and discounts to compete with other local businesses whereas a large organsiation will run national promotional and advertising campaigns to attract as wide an audience as possible.

• A local corner shop is likely to advertise in local media whereas a large organisation will advertise in national publications and TV.


Solution 3• Competition for donations – the number of

charities is growing therefore charities will spend money to attract us to donate to their cause over the cause of others.

• To raise awareness – charities need to spend large sums of money on TV campaigns etc. to keep themselves in the public eye.

• Reduction in disposable income – individuals have less money and are therefore less likely to donate so charities must find ways to appeal to them.


The role and importance of marketing in organisations –

Marketing has 3 Main Aims1. To Identify consumers’ requirements

Businesses must identify what exactly consumers want from a product or service. Failure to do this will result in poor/no sales.

2. To anticipate consumers’ requirementsConsumer trends must be considered in order to anticipate future needs and wants. (changing fashions)

3. To satisfy consumers’ requirementsThe consumers is king. Organisations must offer consumers the right product at the right price, available in the right quantities at the right place.


Marketing Task 3

Identify and describe the three main aims of a marketing.

Apply each one to:

a manufacturer of mobile phones

a banking service.(6 marks)


Marketing

conduct market researchdevelop and design productdetermine right quantities and right qualitydecide best price to sell at promotion and advertisingdecide best place to sellensure continued customer satisfaction

“Marketing is the management process responsible for identifying, anticipating and

satisfying customer requirements profitably.”


Solution1. An organisation must identify consumers’ requirements. A

mobile phone manufacturer must communicate with consumers to identify what consumers want in a new mobile phone - price, features, colours, etc. A bank must identify the financial services and products that suit peoples current situations - online banking, flexible mortgages etc.

2. An organisation must anticipate consumers’ requirements. A mobile phone manufacturer must try to consider what features a consumers requirements in the future as it will take them time to develop the necessary technology. A bank must anticipate how people will manage their finances in the future and have the necessary financial products and services to suit their requirements.

3. An organisation must satisfy consumers’ requirements. A mobile phone manufacturer must ensure that any new products they develop are available at the right price and the right time to ensure people buy their product and not a competitors. Similarly, a bank must ensure that any financial products or services they launch will make customers invest their money with them or take out a product with them.


The marketing conceptMarketing as a strategic

activity• E.g. increasing market share can only be achieved through

improving marketing

• Increase sales revenue and profitability

• Increase market share

• Maintain or improve the image of the business

• To target a new market

• To develop new and improved products


PRODUCT ORIENTATIONBusiness are said to be product-oriented (led) when they focus on the product and the production process rather than the wants of the consumer.

This approach works where• there is a lack of competition• customers’ expectations are not sophisticated• customers’ knowledge of products is limited• low disposable income• media pressure is less

“they can have any colour they want as long as it’s black”

Henry Ford in launching Model T


MARKET / CUSTOMER ORIENTATION

A market/customer-oriented business in one which continually identifies, reviews and analyses consumers’ needs.

A market-led business has several advantages over one which is product-led. They are more able to:

• anticipate changes in market• respond to changes in market• meet the challenge of competition• be confident about success of new product launch


Marketing Task 4

Describe a strategic marketing objective that BMW might pursue. Explain why you consider the objective to be strategic.

(2 marks)

Organisations can take a product-led or market-led approach. Distinguish between these terms and give examples of products for both approaches.

(3 marks)


Solution• A strategic marketing objective may be to

increase sales by 20%. This is strategic because it is long term/made by senior managers/doesn’t go into a lot of detail.

• Product led focus on the product and the production process rather than the wants of the consumer whereas market led continually identifies, reviews and analyses consumers’ needs. An example of product-led products was Concorde. An example of a market-led product is Gillette Razors or Coca Cola.


What about services?

• they are intangible• they are often sold and consumed at

the same time• their quality may be variable

Services are distinguished from goods in the following ways:

Therefore the marketing of services often concentrates on the quality of the service


Marketing Task 5

Distinguish between goods and services.

(2 Marks)


Solution• Goods are tangible whereas services are

intangible.• Goods can be produced, stored and

consumed at a later date whereas services are usually sold and consumed at the same time.

• Goods can be produced in constant conditions so that quality can be closely controlled whereas services are often provided on the spot and the quality may be dependent on the person providing the service.


The Marketing Environment

Organisations operate in an environment that is constantly changing. It is vitally important that marketing decisions take account of the forces that shape that environment in order to compete more effectively.

The marketing environment is made up of:

• The government• Competition• Technology• The economy• Consumer trends and behaviour


The governmentMarketing is subject to legislation and this has to be taken into consideration when making marketing decisions.

• The Trade Descriptions Act – goods or services must do what they claim they can do.

• Consumer Protection Laws – there to ensure the products that be buy are safe. • Minimum standards are set for products such as

cars and electrical goods. • The business is liable for any damage which its

defective goods may cause to a consumer.


The government

The Monopolies and Mergers Commission • set up to monitor firms which might act

against the public’s interest. • They investigate cases where large dominant

firms act to exploit their positions

Fair Trading and Competition Acts• these Acts try to ensure that no businesses

work to prevent competition in their market.


The government

Code of Advertising Practice – adverts must be legal, truthful and not cause offence

The Advertising Standards Authority – this is a voluntary organisation set up by advertisers and marketing companies to monitor advertising in the UK


Marketing Task 5

Describe 4 pieces of legislation that could affect marketing decisions.

(4 marks)


SolutionThe Trade Descriptions Act affects marketing decisions because any goods or services advertised by an organisation must do what they claim they can do.The Code of Advertising Practice affects marketing decisions because it ensures that adverts must be legal, truthful and not cause offence. Fair Trading and Competition Acts affects marketing decisions because an organisation can not be seen to be preventing competition in the marketplace which would have a negative impact for the consumers. Monopolies & Mergers Commission would possibly affect any marketing decisions which could result in an organisation growing as they would investigate any cases where large dominant firms acted to exploit their positions


Competition

All markets are subject to some competition either directly or indirectly from “close substitutes”

Customers can substitute one good or service for another.

Consider the different ways of travelling from Glasgow to London.


Technology

Advances in technology create new markets and cause decline in others

Class Discussion

Can you think of examples of markets that have changed through advances in technology?


The economy• The economy has a major influence on consumer behaviour and on

organisational behaviour.

• During economic growth (boom period) consumer spending will increase

• Inflation – prices will increase therefore people will have less disposable income e.g. petrol, food prices. Organsiations will pay more for raw materials meaning increase may be passed on to customers or absorbed by the firm.

• During recession consumers spend less and organisations tend to concentrate on reducing production costs and prices.

• When interest rates are high, borrowing becomes more expensive, so consumer spending is reduced

• Exchange rates – will affect imports and exports, when the value of the pound is high foreign goods become cheaper for consumers in Scotland

• Scottish manufacturers will find their goods difficult to export because the products will now be more expensive for consumers abroad.


Marketing Task 6

Explain economic factors that can affect the profitability of a business.

(6 marks)


Solution• Economic growth - consumers feel more confident about

their job security and are more willing to spend money on goods and services which may lead to increased profitability.

• Inflation - prices will increase therefore people will have less disposable income to spend on goods and services.

• Recession - consumers feel less confident about their job security and are less willing to spend money on goods and services which may lead to reduced profitability.

• Interest rates - when they are high, borrowing money from financial institutions becomes more expensive so consumers are less likely to buy high-value, high-cost products.

• Exchange rates - when the value of sterling is high, foreign goods and services will become cheaper for consumers who may refrain from buying from UK manufacturers or providers.

• Exchange rates - when the value of sterling is low, UK produced goods become more attractive pricewise to customers at home or abroad, potentially leading to increased profits.


Consumer trends and behaviour

Age distribution and population (demographics)

Geographic locationGender

Disposable incomeHousehold status

Social classTaste fashion and lifestyle


Marketing Task 7

Explain how consumer trends and behaviours may affect marketing decisions.

(4 marks)


Solution• Age distribution and population (demographics) would affect

marketing decisions because the UK has an ageing population which has led to the creation of new market opportunities.

• Geographic location would affect ….because consumers living in different parts of the country would have different needs and spending patterns.

• Gender would affect….because male and females spend money in different ways.

• Disposable income would affect…because the increase over the last 30 years has meant more spending on different types of goods or services including home furnishing, recreation and transport.

• Household status would affect…..because more people are living on their own for a variety of reasons which has led to different or new demands for goods and services.

• Social class would affect….because people tend to share similar tastes and interests with people of the same status and their spending patterns are reflected by their social class.


The rise in importance of marketing over the past 50 years is the result of:

• The availability of mass media for advertising

• economic growth and the increase in real disposable incomes

• continuous changes in fashion, taste and lifestyle

• rapid increase in technologies leading to new products/services

• increased competition between products and services at home and from abroad

Businesses which failed to recognise the importance of marketing and respond to the above changes were left behind.

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