4.

1 THE ROLE OF MARKETING

Marketing: the activities that take place to convince the customer to buy the product.

The human resources functions

The most important link between marketing and human resources functions is to determine
whether the business has the right quantity and quality of staff to meet its marketing
objectives.

The finance and accounts function

An ongoing dialogue with the finance department is essential if effective marketing

objectives and strategies are to be created.

The operations management functions

Market research will tell the operations management department where to focus its research
and development. These innovations → marketing department → sales forecasts →
operations management functions.

Market : a place where buyers and sellers come together

Location : location is important for the image of the product and the company. Sometimes
products are changed according to location and the culture of the region in order to satisfy
customers.

Type of product : We might consider differentiating by product type for example, we refer to
the market for mobile phones or soft drinks.

Market characteristics

An attractive market is one that has many potential customers and relatively weak
competition.

The Product Life Cycle: is a model that is designed to help product managers make
strategic decisions concerning a product’s marketing mix. (Development, Introduction,
Growth, Maturity and Decline)
The Boston Consulting Group Matrix: is a tool to help companies with multiple products
decide their marketing strategies. Products are placed on the matrix depending on two
variables: market share and market growth.

STEEPLE Analysis : this analysis looks at the external factors that could affect a company's
future success.

SWOT Analysis : 'SWOT' stands for strengths, weaknesses, opportunities and threats.
Strengths and weaknesses are internal factors that could help or hinder future growth.
Ansoff Matrix : it is used to identify which overarching strategy the business should use and
then informs which tactics should be used in the marketing activity.

Marketing Goods and Services

Whether a company primarily sells goods or services, the main aim of the marketing function
remains the same.

Marketing Mix: consists of product, price, promotion and place. These are the elements
of a marketing strategy that can be adapted to meet the needs of the customer.

Market orientation : an approach to business that prioritizes identifying the needs and
desires of consumers and creating products and services that satisfy them.
Product orientation : companies are considered to have a product orientation if they
prioritize research and development over market research.

Social marketing

The term 'social marketing' has two meanings. It could refer to marketing activities that take
place on social media. However, in this context we will take it to mean marketing activities
that are carried out for the good of society.

Differences between social and commercial marketing

The aim of commercial marketing is to meet customers' needs. The aim of social marketing,
on the other hand, is to change people's behavior.

Market share

Market share measures the value of a single company's sales compared with the sales of all
businesses in a market.

FORMULA : Market share = Product sales / Total market sales × 100 = _______ %

Market leadership

The market leader is the product or brand with the highest market share.

Pros : ease of access to channels of distribution, brand recognition, economies of scale,

price leadership.
Marketing objectives

An objective is a goal that is set for part or the whole of the business. Objectives can be
corporate, divisional or departmental.

Marketing objectives give direction and accountability to the marketing function.

Evolution of marketing strategies

- Changing customer preferences

- Innovation
- Ethical considerations
- Selling green products
- Treating workers fairly
- Ethical treatment of suppliers
- Cultural Difference
 4.2 MARKETING PLANNING

Marketing plan : The marketing plan is a plan of action. It is a document that details all of a
company's marketing activities.

A marketing plan should allow a company to develop a coherent and focused marketing
strategy.

Marketing objective : This will provide direction for the marketing function. If achieved, the
marketing objective should help the company achieve its overall corporate objective.

Marketing budget: A budget is the amount of money that has been allocated to a task. The
finance team will set the marketing budget for the marketing team, but in many ways it is the
marketing team's activities that determine how much money there is to play with.

Market segmentation : Market segmentation refers to the categorizing of customers into

groups with shared characteristics.

Market research : Market research can be defined as gathering information about

consumers' needs, tastes, habits and preferences to aid marketing decisions.

Marketing strategies : Marketing strategies are long-term actions that aim to achieve the
marketing objective.
Marketing cycle : Marketing should be viewed as an ongoing process and marketing plans
should be continually updated.

MARKETING MIX 4 P’S

Product : goods and services

Price : price strategies where many internal and external factors need to be considered

Promotion : above-the-line (small audiences, directly) promotion and below-the-line (large

audiences, tv…), depends on factors such as which media the target market uses,
promotional objectives and the marketing budget.

Place : where it is sold and the route it takes from the producer to consumers.

Market segmentation

Segmentation involves splitting a population into groups of people with similar needs or
characteristics. A target market is the consumer segment at which a company aims its
marketing messages.

Geographic segmentation : involves dividing consumers according to their location.

Demographic segmentation : involves dividing consumers according to characteristics

such as age, gender and occupation.

Psychographic segmentation : divides the population according to lifestyle and personal

interests.

Target market : is the specific group of customers at which a firm aims its product(s).
Niche market: small specific subsection of a larger market, focused on providing a particular
product or service or satisfying the needs and wants of a small market segment.

Mass market : the market for goods that are produced in large quantities.

Product positioning maps

Companies differentiate themselves from each other, positioning their brand to meet the
needs of their selected target market.

Product positioning maps are visual representations of how the various competitors attempt
to position their brands in the eyes of the consumer. Usually these display two attributes,
such as price, quality or age.

Strategic groups : are companies that are very similar and target the same consumers.

Product differentiation highlights the differences between a product and its rivals. A
unique selling point (USP) is the thing that marks a product or brand out from its
competition.
 4.4 MARKET RESEARCH

Market research : refers to marketing activities designed to discover the opinions, beliefs
and preferences of potential and existing customers.

Involves collecting data and information about competitors and market trends to gain insight
into a specific industry.

Ad hoc market research : takes place on an ‘as and when necessary´ or one-off basis.

Continuous market research : takes place on a regular and on-going basis.

Market research (what I have and what I can achieve) : market share, market size, market
segments, customer mix, competition influences, competitors and spending group.

Types of market research

Primary: involves gathering new and first-hand data for a specific purpose.

For example: surveys, focus groups, observations

Pros : relevance, up to date, confidential and unique

Cons : time consuming, costly, validity

Secondary : involves the collection of second-hand data and information that already exists

For example : academic journals, government publications, media articles

Pros : faster and cheaper, can provide an insight to changes or trends in an industry's huge
range of sources especially online, findings are often based on large sample sizes and
through research techniques, so the results are statistically valid.

Cons : the information might be already outdated and in an appropriate format for the
researcher, it might only provide partial information as it was produced for a different
purpose and the data and information are also available for competitors.

- Ethics : from how research is designed through to the presentation of results, ethics
have to be considered at every stage of the market research process. If they are not,
the consequences can range from a loss of public trust to criminal action.
Qualitative and quantitative research

Qualitative : (WHY) involves getting non-numerical answers and opinions from research
respondents. Responses will likely contain lengthy answers from the participants.

Pros : better for exploring the motivators and demotivators, information gathered can be
very valuable and there is flexibility in the process, it can be expensive but provides detailed
information to the researchers.

Cons : findings might not be representative of the whole population, time consuming, high
level of interviewing expertise is needed so it is expensive.

Quantitative : (HOW, WHEN) Seeks to gather a relatively small amount of information from a
large group of respondents (factual and measurable information rather than people’s views).

Pros : objectivity, helps to remove biases from the research and make the findings
more accurate, easier to obtain the answers.

Sampling : sampling is a primary research technique that selects a small group of the
population from a particular market for research purposes.

Sampling methods :

Quota: certain number of people of different market segments selected and grouped by their
characteristics.

Random: gives everyone in the population an equal chance of being selected. Useful when
all members of the population have the same or similar characteristics.

Stratified: subgroup of a population with similar characteristics, knowledge of the

population.

Cluster breaks the population geographically into different areas.

Snowballing: uses individuals who then suggest other friends or family at random.

Convenience : uses subjects that are easy to reach, ease of data collection, but a large part
of the population might be excluded.

- Market research is not a perfect science so the results from data collection might not
be absolutely reliable.
- There is always a chance that respondents do not answer truthful answers.
- There are two types of potential errors in the results from data collectors.

Ways to show the results of data collection

Bar charts - to compare

Pie charts - to show percentages

Line graphs - to show changes over time

Histograms - to display frequency

Pictogram - to display frequency

Scatter plot - to show correlation

Table - to display all data collected

 4.5 PRICE

There are nine different pricing strategies available. Out of these, two can only be used for
new products: price skimming and penetration pricing. The other options for existing
products will depend on the type of product and the company's strategy.

Price skimming: Launching a product with an initial high price to give an image of
exclusivity and prestige.

Pros : It promotes a high-quality image. Revenue is maximized from the 'Innovator' market
segment.

Cons : Many customers may be put off by high prices.

Penetration pricing : Launching a product with an initial low price to encourage consumers
to try it and hopefully develop brand loyalty.

Pros : Market share and customer loyalty may be quickly established.

Cons : Low profit margins are likely during the initial low price. Customers may not accept
the price rise.

Cost -plus (mark - up) : Calculating the total cost of a product, then adding a percentage for
the profit margin.

Pros : It is simple, and easy to ensure all costs are covered.

Cons : It is inward facing, and takes no account of the market.

Price leader : Adopting a price that is slightly above rivals to give an image of prestige.

Pros : It gives an image of high quality. Higher profit margins can be enjoyed.

Cons : It is only suitable for market leaders. Price-sensitive customers will be lost.

Price follower (competitive pricing) : Setting a price that is similar to that of rivals.

Pros : It is market oriented and should ensure potential customers are not lost because of a
high price.

Cons : It takes no account of cost, and profit margins may therefore be low.
Psychological : Setting a price in a way that seems attractive to consumers.

Pros : It is simple to implement.

Cons : It is easy to copy. Therefore, any advantage may quickly be eroded by rivals who
follow the same strategy.

Predatory : Temporarily setting an extremely low price to undercut rivals, forcing them to
leave the market.

Pros : Once competition is eliminated, higher prices and higher market share can lead to
increased profits.

Cons : It is illegal in many countries.

Price discrimination (dynamic) : Charging different groups of consumers different prices

for the same good or service.

Pros : Profits are maximized from each consumer segment.

Cons : It is not possible in all markets. Some customers may feel cheated.

Loss leader : Stores significantly reduce the price of a single item below cost price to attract
customers, expecting customers to buy other products while they are shopping.

Pros : It can lead to a large boost in sales revenue.

Cons : It is only possible for multi-product retailers.