IB Business & Management

IB Business & Management

Unit 4.1 The Role of MarketingLesson 1: The Marketpp. 439-4431DefinitionsMarketing is the management process which identifies, anticipates and supplies customer requirements efficiently and profitably.The Chartered institute of Marketing.

Marketing makes selling superfluous

2a. An overviewRemember back in Unit 1.1 and Unit 1.2, when we talked about NEEDS and WANTS?Needs are?Necessities you must have to survive: food, shelter, water, NOT your cell phone!Wants are?The desires you have: nice car, cell phone, new computer, etc.Marketing addresses peoples needs and wants.It is about making customers want to buy a product.Looks at the reasons why people decide to buyThe price, color, size, special feature of the product.Marketing takes a want and turns it into a need.

32b. An overviewRemember the activity we did? To create a product based on a persons need.Think about this:Do you know this man?Bob Marley (1945-1981)Once said that he did not NEED a BMW.So, you are in the marketing departmentHow are you going to turn this product into a need?The 4 Ps of marketing and your departments main objectives are:ProductsPricePlacePromotion

43a. The MarketWhat is it and why is it important?It is a place where customers and suppliers trade.It exists where there is a demand for a product and business try to satisfy that demand.Two kinds of markets:Consumer markets: the general publicIndustrial / Commercial markets: business and governments Within each market there will be rival products and suppliers.Each business will be interested in three things:1. the size of the market2. the growth rate within the market3. the firms share of the market.Lets take a closer look at each one.

53b. The Market: Market SizeMarkets will differ in size.For example lets look at the fast food industryIs there room for growth? Why do you think so?What about the car industry?What about the market for horse saddles?Now, the market size can be measured in a number of ways:A. Customer base:The total number of potential customers:Think about expanding into Chinahow many people live there? How many are between the ages of 22-29?Think about an online business and the internet. How many people does the internet serve?

63c. The Market: Market SizeB. Barriers to entry:The total number of suppliers in the market.The kind of industry, think about entering the oil and aircraft industryeasy to do? Huge set up costs.With low barriers to entry there will be a lot more firms operating there on a smaller scale.C. Location, Location, Location :Some markets focus on certain countries / regions.Do you know Adidas?They are the market leader in Tae Kwon Do equipment.

73d. The Market: Market GrowthRefers to an increase in the size of the market over a period of time.This is measured by an increase in the value or volume of sales in the market.For example:If sales revenue in a market rises from $200 million to 220 million, the market is to have grown by 10%.83e. The Market: Market ShareThere are many rival products and firms in the market within any given market.Your business also contributes to this market share. But how by how much?Market share = sales revenue of firm x 100 total sales revenue in marketIf you increase your market share you will increase your profits.But having the largest market share might not be the most profitable. Think about your costs Other benefits to having a larger market share:Status being number one; a market leader.Economies of scalePricing powerSo how do you increase your market share?Promotion of brands (Unit 4.3)Product development (Unit 5.6)Motivation / training (Unit 2.5)Establish property rights (Unit 3.5 and 5.6)Use more efficient channels of distribution (Unit 5.6)

94a. The Nature of MarketingThere is no single, set definition of the term marketing:Marketing objectives of each and every firm differ.The Chartered Institute of Marketing defines it as the management process involved in identifying, anticipating and satisfying consumer requirements profitably. Wow! Thats a mouth full.Al Reis and Jack Trout believe it is the battle for your mind.Your textbook gives more definitions please read them. Get on the internet and see what is out there as well.But most importantly get this book and read it:It is all about being FIRST in the mind of the consumer.Dont believe me? Think about it,Who was the second man to walk on the moon?Who was first to invent the car? Who was second?Who was the second person to fly across the Atlantic?

104b. The Nature of MarketingMarketing will either make or break a company.It will affect the sales and profits of the organization. Marketing alone will not guarantee success either; marketing must work along side of other functional areas within a business such as:Operational management:The production department will work very closely with the marketing department. Why?Finance:Together they will set appropriate budgets. Why is this important?Human resource management:Marketing data can help this department to identify staffing needs.11IB Business & Management

Unit 4.1 The Role of MarketingLesson 2: Market & Product Orientationpp. 444-450121. Product OrientationMarketing has changed over the years from:product-orientated (getting customers to buy the product) to market-orientated marketing (meeting actual needs or desires of customers).Product orientation:It is inward looking.The focus is on selling products that a company makes, rather than making products they can sell.Businesses hope the customers will buy their product.Says Law: Supply creates its own demand.Concept today is customers will pay higher prices for a higher quality good.These companies assume to know what you, the customer wants.This is a very risky strategy to employ.You will find out very quickly that you will need, when developing products, to take the customer into consideration.

132. Market OrientationAlso called Consumer orientation.This approach is an outward looking one.The focus is on making products that a business can sell, rather than selling products that they can make.Main focus is on the consumer in order to:IdentifyDesignDevelop andSupply products to meet their needs and wants of customers.If you ignore your customer, you will lose competitiveness.Two main advantages to using this approach:Flexibility: respond quicker to changesLess risk: by conducting market research, you will have a greater success meeting the wants and needs of your customers.Market orientation approach tend to be expensive because of the market research.So how can you decide which approach to use? It will depend upon:The market: highly technical products vs. mass consumer market products.Organizational culture: the customer is always right market oriented.Nature of barriers to entry: not much competition less customer focused.

143a. Marketing of Goods & ServicesWhat is a service?Is an intangible product such as a train ride, getting a hair cut.There is no ownership of the product and it is perishable.Customers pay for services in order to fulfill wants and needs.Can you think of any services that would fulfill a want or a need?Marketers will use the 4Ps (marketing mix) for goods; the marketing of services includes three additional elements:1. People2. Processes3. Physical evidence.Together these form the 7 Ps in the marketing mix.Lets take a closer look

153b. Marketing of Goods & ServicesPeople:Remember services depends on the goodwill of all employees.How can you ensure good service:Appearance and body languageAptitudes and attitudesFeedbackEfficiencyProcesses:Refers to the way in which a service is provided and delivered.If you are selling a service how do you demonstrate to customers the benefits of services?Payment methodsWaiting timeCustomer serviceAfter-sales carePhysical Evidence or environment:Refers to the tangible aspects of a service.Whats in a 5-star hotel? What do you see when you first walk into a place like this?Challenges facing you as a manager in delivering quality customer service:Correcting mistakesMeasuring productivityPeople management

16SOCIAL MARKETING (p183) Social marketing is apply the concepts of commercial marketing to the benefit of society or the social good.The most common examples are public health campaigns. Eg: discouraging smoking or drinking. These have increasingly used shock tactics such as the recent EU anti-smoking campaign featured in the case study. IB Business & Management

Unit 4.1 The Role of MarketingLesson 3: Marketing in NPOpp. 450-45418Marketing

19Asset-Led

20Asset-LedAn asset-led business aims to use the core-competence of a business in developing new products and servicesThose assets may be human, physical or intangible assets

21Strengths of the BusinessPhysical AssetsDistributionManufacturing baseGlobal reachIntangible AssetsBrand nameImagePersonnelCore Competence what the business sees itself as being good at22Market-Led

23Market-LedA marketled business has its focus purely on the needs of the customerThe business is highly responsive to the needs of consumers it has a focus on market research as a means of identifying those needs

24Market-LedBasic principles:The customer is king!Customer service is paramountNeeds of consumers uppermost in new product developmentCustomer servility being a slave to the customerDo not contemplate the cost of doing something to meet customer needs, contemplate the cost of not doing it!

25Building RelationshipsImportance of building relationships to meet customers needs and expectationsSuppliers good relationship with suppliers means that goods are available when the consumer needs them and that the business is able to respond flexibly to changeCustomers knowing who your customers are, what their needs are and how the market is changing261. NPOsMarketing in NPOs is somewhat different than the market-led strategies by profit seeking companies.Tends to be more informativeThey use social marketing strategies:main aim is not to make a profit, but for the public to take action.Donating moneyGovernments and other departments are opting to use this strategy.They will also use catchphrases or slogans as a strategy.Your Country Needs You, a slogan during WWI in England.Kotler, a marketing guru, coined the term de-marketing: the use of marketing to reduce the demand for socially undesirable products, like tobacco.Funding can be a huge problem for NPOs, they will use public relations to give them a better public image, to increase awareness.The use of the internet has help to cut marketing costs down for the NPOs.They will also strive to increase their distribution channels (Unit 4.6)272. Elements of a Marketing PlanA marketing plan is a document outlining a firms marketing objectives and the strategies to be used to achieve these objectives.The plan is usually preceded by a marketing audit.This is a review of the current position of the firm's marketing mix, in terms of SWOT.May address issues of competition, an assessment of the effectiveness of the firms marketing.From the audit you the manager, can now proceed on to the marketing plan. It will include the following:SMART marketing objectives (Unit 1.3).Methods for market research / Identifying target markets.SWOT of the competitors in the market Outline of the marketing mix 4/7 PsDetails of the marketing budget (how much is this going to cost the firm)Outline any problems that you may encounter and strategies on how to deal with them.Do not forget to use a PEST analysis Main advantage: Improves the chances of success.Limitations:Many firms do not have time or resources to plan their marketing.Plans can become outdated very quickly.Can be inflexible, do not allow for sudden changes.

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