Marketing is the management process of predicting, identifying

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1 The role of marketing The greatest pleasure in life is doing what people say you cannot do. Walter Bagehot ( ), British journalist Marketing is the management process of predicting, identifying and meeting the needs and wants of customers in a profitable manner. The Market Market - Place or process whereby customers and suppliers trade. It exists where there is demand for a particular product. Where there is a willingness from businesses to supply these products Consumer Markets - Markets that cater for the needs and wants of private individuals. Suit the general population

2 Industrial or Commercial Markets - Markets that cater for the needs and wants of organisations, other businesses and government In any market, there will usually be some degree of competition. The business will also be concerned with the size of the market, the rate of growth in the market and the firm s own marketshare. Market Size Market size is measured based on the customer base to find the total number of potential customers, or it may be measured as a value of the volume or value of what the customers purchase. If the business expands into other areas, they increase their potential customer base. Market Growth This is how fast the size of the market is increasing. It can be assessed based on the volume of the products sold, or the value. The increase is often expressed as a percentage per year. As a market grows, you are more likely to see new suppliers entering. This increases the competition, as they all want profits.

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4 Market Share Market share gives the business an indication of the share the business has of the sales in that market.

5 Firms that have a high market share tend to have good profits, and can benefit from being market leaders and having economies of scale. They have more pricing power and are less threatened by competition. A business can increase their market share by; Promotion Product development, improvement and innovation Motivating and training their workforce Ensure they have property rights through patents and copyright.these stop other firms using their innovations

6 More efficient channels of distribution

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8 Market concentration measures the degree of competition that exists within a market by calculating the market share of the largest few firms in the industry, i.e. those with market leadership. The sum of these market shares is known as the concentration ratio. (Video)

9 Market and product orientation

10 Market orientation is a marketing approach used by businesses that are outward looking..

11 Market orientation focuses on the customer in order to identify, design, develop and supply products that meet their needs and wants.

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14 There are advantages to this approach,

15 Greater flexibility in response to market changes Less risk of a failing product. Disadvantages Market research can be quite expensive, and this approach does not always guarantee success. Their success is dependent upon the nature of the market, the culture of their organisation towards customers and any barriers to entry in the market. Product-Orientation Such businesses are described as being inward-looking, since they focus on selling their products, instead of making product to suit the needs and wants of their consumers. This often applies to innovative products, especially technological ones, which enter the market unknown. A good product can create its own market, since customers are enticed to buy creative and innovative products. These businesses will focus on selling very high-quality products, especially exclusive and luxury ones.

16 Supply creates its own demand to what extend is this statement is true to product orient marketing approach? The Tesla Model 3 is the first vehicle built on Tesla s thirdgeneration platform. It aims to reduce the entry price for electric vehicles while not making any compromise on range and performance. The Model 3 starts at $35,000 in the US and deliveries to employees and company insiders began in mid (video)

17 Commercial marketing and social marketing Commercial marketing is the use of marketing strategies to meet the needs and wants of customers in a profitable way. Social marketing refers to any activity that seeks to influence social behaviour to benefit the target audience and society as a whole. Marketing objectives

18 The marketing objectives of for-profit (profit seeking) organizations include: Increased sales revenue Higher market share Increased market leadership Improved product and brand awareness Developing new products Enhanced brand perception - Customers opinion or judgement about the business This does not necessarily apply to non-profit organizations (NPOs) such as charities, educational establishments, religious organizations and government departments. IB Learner Profile - Be an inquirer In an industry once dominated by Motorola, Nokia and then Apple, investigate how Samsung become the world's largest mobile phone maker. A good starting point is this article from Bloomberg Businessweek:

19 Marketing goods and services Intangibility Inseparability (services are consumed at the same time of purchase) Heterogeneity (experience is different for different customers. Goods are homogeneous) Perishability (services cannot be stored) Product strategy Price strategy Promotional & place strategy Place strategy (location) Theory of knowledge Is it more difficult to market a good or a service?

20 Unethical marketing Unethical marketing exists when moral codes of practice are not adhered to and when such activities cause offense to members of the general public. Ethical code of practice: refers to guidelines that help businesses to act in a moral way by considering what is ethically right or wrong (from society s point of view) For example, bait and switch marketing techniques are considered to be unethical in many parts of the world. This is a controversial marketing method used to entice customers by advertising deals that are simply too good to be true. Once customers are hooked onto the deal (the bait), they discover that it is no longer available and change to purchasing another more pricey alternative (the switch) from the business. Airlines tickets, Real estate

21 Other examples of misleading, deceptive or unethical marketing techniques include: Product misrepresentation

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24 Exploitation of weaknesses

25 Unsubstantiated claims Pester power Confusion marketing Health fraud

26 Travel fraud

27 Get rich quick schemes Ethical code of practice refers to guidelines that help businesses to act in a moral way by considering what is ethically right or wrong (from society s point of view).

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30 Marketing planning Marketing planning is the systematic process of devising marketing objectives and appropriate marketing strategies to achieve these goals. The typical marketing planning process involves: Marketing audit - an examination of the current climate in which the business operates. Market research is integral to this investigation. Marketing objectives - Marketing strategies - the plan and use of the marketing mix to achieve marketing objectives. Monitoring and review - a continual process of checking and monitoring that targets are being met. Hence, marketing strategies might need to be adjusted accordingly. Evaluation - an examination of the extent to which the firm has succeeded in achieving its marketing objectives. This aids decision-making and subsequent rounds of marketing planning.

31 The 4 P s of marketing mix The marketing mix is the combination of various elements needed to successfully market a product. It is used to review and develop marketing strategies and is at the heart of marketing planning Product - the good or service being marketed to meet the needs and wants of customers. Price - how much customers have to pay to buy the product.

32 Promotion - methods of informing, reminding and persuading customers to buy the product. Place - the distribution channels used to get the product to customers. Activity: Design an appropriated marking mix for a product or a business of your choice. Example:

33 Products can be tangible (physical products) or intangible (services). Products must have value added in order to stand any chance of success in the market place. Consumer products These are products that are purchased by private individuals for their personal use. * Fast moving consumer goods (FMCG) are everyday convenience products that are sold in retail outlets. Examples groceries, personal care, newspaper etc. * Consumer perishables are products that do not last for very long time, such as fresh flowers or fresh seafood. *Consumer durables are products that are purchased irregularly because they tend to last for relatively long time and/ or take up a relatively large proportion of a consumer s income. Example ; Furniture, automobiles etc..

34 * Speciality consumer products- are exclusive and expensive products that often require a large amount of commitment in both money and time. Examples : jewellery, residential property etc. Producer products Producer products or industrial goods are those that are purchased by businesses, rather than aimed at consumers. They are used in the production process to help the running of the business. Examples raw materials, machinery, tools and other equipments. Target markets and market segments Targeting means that each distinctive market segment can have its own marketing mix. Different markets can also be targeted, depending on whether they operate in niche, differentiated or mass markets.

35 Market segmentation is the process of splitting a market into distinct groups of buyers in order to better meet their needs. The main method of market segmentation is based on demographics, geographic and psychographics factors. Consumer profile are the characteristics of customers and consumers in different markets, such as their age, gender, income and purchasing habits. Segmentation by demographics. Demography is the study of the characteristics of the human population within certain areas or region. It looks at a range of variable including: Age Gender Race and ethnicity Marital status Religion Language Income and socio-economic class

36 Segmentation by geographic factors Location Climate Segmentation by psychographic factors Status Values Culture Hobbies and interests Advantages of segmentation - Better understanding of customers - Increase sales - Growth opportunities - Gives support to product differentiation It is not always be possible for a business to effectively carry out market segmentation. Marketers often use the acronym DAMAS as a set of criteria for ensuring successful segmentation:

37 Differential segments must be unique and respond to the different marketing mixes of the business. Actionable businesses must be able to provide suitable products to cater for each segment. Measurable the size and purchasing power of each segment must be quantifiable. Accessible the business must be able to reach customers in customers in a cost-effective way. Substantial each market segment must be sufficiently large in order to generate profits. TARGETING Targeting means that each distinctive market segment can have its own marketing mix. Different markets can also be targeted, depending on whether they operate in niche, differentiated or mass markets. Niche marketing Niche marketing, also know as concentration marketing, targets a specific and well-defined market segment.

38 Examples: Businesses that provide speciality goods such as Armani suits, Ferrari cars and Cartier watches operate in niche markets, catering for consumers interested in high-end luxury goods. Advantages of niche marketing: There is better marketing focus since a specific market segment is being targeted. Since there is less competition, businesses can charge higher prices for their exclusive products. This will help the business to gain higher profit margins. Firms become highly specialized in meeting the need and wants of their niche target market. Disadvantages of niche marketing: Limited number of customers Few opportunities to exploit economies of scale. Highly successful and profitable niche markets may attract new entrants into the industry.

39 Undifferentiated marketing (mass marketing) Undifferentiated marketing, also know as mass marketing or market aggregation, is the strategy that ignores targeting individual market segments. Instead a large number of different market segments are targeted in order to maximize sales volume. Example : Coca-Cola, Nike, Nokia, Apple and Microsoft all use this strategy to all market segments in the same way. Advantages Huge potential economies of scale from being able to supply products in a mass market. There is no need to tailor different marketing mixes for different segments, this can save the business a lot of time and resources. Disadvantages Competition can become quite fierce as customers must be persuaded to buy the firm s product rather than to buy from a rival business.

40 Mass marketing is not suitable for all businesses because there are high entry barriers for mass production. Differentiated marketing Differentiated marketing, also know as selective marketing or multi-segment marketing, is the targeting strategy that tailors a marketing mix to each market segment. Advantages Customers can enjoy a more satisfying experience since a tailored marketing mix caters for their specific and individual needs and wants. Risks are spread out by focusing on several market segments. Hence decline in one market segment has less of an impact on the overall business. Disadvantages Differentiated marketing is costly. Excessive differentiation can drain a firm s resources and confuse customers. (In reality, many businesses will have operations that use all three targeting Strategies)

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