IB Business & Management Unit 4.1 The Role of Marketing.

IB Business & Management

Unit 4.1 The Role of Marketing

Learning OutcomesTo understand:• Marketing and its relationship with other business functions – A01• The differences between marketing of goods and marketing of services • Market orientation versus product orientation - A02• The difference between commercial marketing and social marketing – A02• Characteristics of the market in which an organization operates – A02• Market share - AO4• The importance of market share and market leadership - AO3• The marketing objectives of for profit organizations and non-profit

Organizations - AO3• How marketing strategies evolve as a response to changes in customer

preferences – A03• How innovation, ethical considerations and cultural differences may

influence marketing practices and strategies in an organization – A03

Central Question

Have you ever purchased anything that you don’t need

or want? WHY?

Definition

“Marketing is the management process involved in

identifying, anticipating and satisfying

consumer needs and wants profitably.”

The Chartered institute of Marketing.

Marketing & Other Business Functions

• Marketing is one Business Function.• What are the others and how might they be:• Affected?• Influenced?• Related?

• Can we link this to our case study companies?• Are the relationships between the functions as

important for each business?

Discussion points

Finance & Marketing

• Marketing is an expense, therefore Finance and Marketing functions need to work together to:

• Set budgets• Set forecasts• Link to company objectives e.g. to increase

market share

Human Resource Management (HRM) and

Marketing• Marketing can influence demand and sales.

Therefore these two functions need to work together closely to:

• Ensure demand can be met (staffing, distribution)• Ensure the business has the necessary skills to

deliver the quality expectations and to maximise efficiency/productivity

Operations Management and Marketing

• The marketing function identifies the needs and wants of the customer.

• This then needs to be communicated, planned and discussed with operations to ensure:

• Quality standards• Meeting of customer expectations• That production is viable – do they need specialist

machines?• That scale is viable – can they meet/satisfy

potential demand?

Task – 3 mins then feedback

• Choose one of our companies.• Research and explain one example when other

business functions needed to liaise with the Marketing function

• Perhaps consider:• Why it was necessary• What do you think they discussed?• The key factors to make a decision?• What was the decision and why?

A Good, A Service or Both?

Marketing of Goods vs. Services

GOODS SERVICES

Tangible Intangible

Can be returned Can’t be returned (an experience)

Can be stored and consumed Can’t be stored

Ownership (asset) No Ownership – just an experience

Easily comparable – e.g. features Difficult to compare (objectively) as different customers have different expectations and different experiences.

Mainly use of the 4 P’s Use of the 7 P’s

Task in Pairs – 5 mins

• Choose a business that produces goods or products

• And a business that provides a service.

• Compare and contrast the different approaches used in their marketing

Product v Market OrientedPRODUCT ORIENTED

“ a business approach that focuses on making the product first before attempting to sell it”

MARKET ORIENTED“ A business approach of first establishing consumer demand

through market research before producing and selling a product”

Market Orientation vs Product Orientation

Market Oriented Product OrientedThis approach is an outward looking one. Main focus is on the consumer in order to:

• Identify• Design• Develop• Supply products to meet

their needs and wants of customers.

It is inward looking.

The focus is on making products that a business can sell, rather than selling products that they can make.

The focus is on selling products that a company makes, rather than making products they can sell.

If you ignore your customer, you will lose competitiveness.

Businesses hope the customers will buy their product.

Market OrientedSTRENGTHS LIMITATIONS

Market research reduces risk of failure.

Market research can be costly, time consuming and could produce unreliable data if not conducted properly (bias).

Understanding the market means the business can respond faster and more effectively to market changes.

Needs and wants continually changing businesses may find it hard to satisfy these consistently with limited resources.

Understanding the competition can help a business to differentiate its products or services.

Future uncertainty may have negative impact on developing an effective market planning strategy.

Product OrientedSTRENGTHS LIMITATIONS

Associated with production of high quality products e.g. Bugatti Veyron, Apple products.

Potentially very risky if the business ignores the needs of the market – (Blackberry, Tesco).

Can build a reputation in markets that have slow change and could benefit from Intellectual Property Protection (patents).

Research and development can be very expensive and possibly useless if not addressing consumer needs or wants (Sinclair C5).

It controls own activities and believes customers will buy its products.

PESTEL factors could be very influential and if not monitored could be very detrimental to the business.

What about our Companies – Product or Market

Oriented?

So…What have we learnt so far?

Write your answers (or any questions) on a post it and stick on

the board

Commercial Marketing vs Social Marketing

COMMERCIAL MARKETING“Marketing activities that determine consumer

needs and wants before using appropriate strategies to market the product”

SOCIAL MARKETING“A marketing approach aimed at influencing a

positive change in individual behaviour and improvements in societal well-being”

Commercial Marketing

No moral judgments needed – just satisfying needs & wants EE/TOK:

But should business have a responsibility

to consider the morals or ethics e.g.

obesity

Should Governments tax “unhealthy

foods”?

Social Marketing

Ensures businesses make good marketing decisions based on

consumer wants, the firms requirements & society’s

interests & welfare e.g. public health campaigns

Can you find examples..?

ADVANTAGES

• Competitive advantage – socially responsible

• Added value – premium prices Fair Trade, organic

Thoughts…

Could a business use both Commercial

and Social Marketing?

Can you think of or research any examples.

Social Media Marketing (SMM)

SOCIAL MEDIA MARKETING“The use of the Internet through social networking

websites to market a firm’s product or service”

SMM Benefits:

• Allows for direct customer feedback• Interactivity – could enhance the AIDA principle• Low cost way of reaching large target audience

(global)• Enhance and promote Brand Image

Usually supported by traditional

Above the Line methods.

Market Characteristics

A MARKET IS:“An arrangement where buyers and sellers

exchange goods and services”

MARKET SIZE:“The total sales of all businesses in a given market”

A MARKET CAN BE MEASURED BY:

• Volume – number of units sold• Value – Total revenue gained from sales

Questions

• What is the size of the global smartphone market by:

• Volume• Value

To what extent is it important for a business to understand whether their market is growing or

declining?

How can we calculate this

also?

Market Growth

“The percentage change in the total market size over a period of time”

SOME FACTORS AFFECTING MARKET GROWTH:• Economic cycle• Competition from new entrants• Social Trends• Technological changes• Laws• Beliefs• Marketing• Pressure groups

Market Share“The percentage of one firm’s share of the

total sales in the market”

Firms Sales

Total market sales

x100Market Share %

=

CAN YOU MEASURE MARKET SHARE BY VOLUME AND VALUE?

If so, could this affect how

the market leader could be judged?

Can Market Share be misleading?

For example:Is the same time period used?Are the types of products the same?

Market Leader

“ The firm with the highest market share in a given market”

Benefits:• Higher sales suggesting higher profits• Economies of scale (but perhaps diseconomies also)• Being market leader can enhance Brand loyalty and

act as a promotional tool

But…sometimes market leaders get complacent and go from Hero to Zero! Why does this happen

and can you think of any?

Marketing Objectives

“The goals or targets a business aims to achieve through the marketing function and which

complement the organisation’s overall strategic objectives”

FOR PROFITORGANISATIONS

NOT FOR PROFIT ORGANSIATIONS

Will they be the same?

Marketing Objectives:For Profit Organisations

• To identify, design and develop marketing strategies that will ultimately be profitable to the business

• Achieved by applying the right mix of the P’s• Mostly Market oriented because want to meet

needs and wants PROFITABLY!

Marketing Objectives:Non Profit Organisations

• Use marketing to address social issues– Environment– Health– Poverty

AIM:To inform and try to bring about behavioural change

Key Problem = Limited financing affecting marketing budget. Many NPO’s use SMM to

raise awareness and funds for their causes – why?

What ways could NPO’s gain free publicity?

• Celebrity endorsements/ambassadors• Government funding• Links with Private for profit firms to improve their

CSR initiatives• Social media campaigns• Any others?

Do Customer Preferences Change Over Time?

What can happen if a

business does not stay abreast

of customer preferences?

BMW Case Study

• To what extent has BMW’s marketing strategy evolved as a response to customer preferences?

KEY CONCEPT LINKS:• Change• Culture

• Globalization• Innovation• Strategy

Could we make a Paper

2 Section C 20 mark

question out of this?

Innovation, Ethics and Cultural Differences

How might these influence marketing practices and

strategies?

Research & Analysis Task - in pairs

Each pair to select one of our concepts:

• Change• Ethics• Culture• Globalization• Innovation• Strategy

Take your concept and choose a business, a market or a good or service (it might make sense to choose one of our companies but you can decide). Some help/suggestions on the next few slides

Change

When have perhaps changes in the external environment impacted marketing strategies or practices?

E.g.:

• Legislation• Consumer tastes• Technology• Environment

Ethics

To what extent are businesses marketing their products in an ethical manner?

Eg.• Cigarette and alcohol companies and their

advertising• Honest transparent campaigns? E.g.

photoshopping on adverts/billboards…• Coca-Cola – Dasani water

• Click Here for false/misleading advertising examples

Culture

How important is it for multinational companies to adapt their marketing strategy to different cultures?

• Multinational companies going into new markets – how might marketing need to be “tweaked”

• Tesco to USA – failure• Starbucks to France – failure (but seemingly

pretty successful everywhere else – why is this?)

Globalisation

How has globalisation impacted the way that businesses market their products/services?

Standardise, localise or…..wait for it…… “Glocalise”??

With increasingly interconnected world what marketing strategy or approach do multinationals use? Why?

Innovation

How does the concept of innovation impacta. New product/service development (3D printing)b. Promotional strategies (social networking)

For example:• How have the movie and music industries been

influenced by the technological innovations – VCR to DVD to MP3-5’s to streaming?

• Oil and gas industry – Fracking? (ethics of fracking?)

• Social media – due to this traditional marketing media becoming obsolete?

Strategy

When a business changes strategy how can this influence marketing? For example:

• Rolex seems to have shifted from Niche to Mass marketing – they sponsor all major events in golf, tennis, formula 1. This must be extremely expensive. Why these sports?

• Samsung has had a dilemma recently – faced with declining market share, does it – compete with the growing “budget” smartphones or does it compete with the very brand loyal iPhones? It has chosen the latter so how will its marketing change?

Reflection

• How does innovation, ethics and cultural differences influence the marketing practices and strategies?

• Post it note your reflections on the board.