Ch17 Nature of Marketing Ms Donne's Class PDF

Nature of Marketing Chapter 17 Learning Objectives Bellwork: Key terms Marketing Objectives- the goals set for the marketing department to help the business achieve the overall (corporate). Marketing - the management task of identifying and meeting the needs of customers profitably by gett...

Nature of Marketing Chapter 17 Learning Objectives Bellwork: Key terms Marketing Objectives- the goals set for the marketing department to help the business achieve the overall (corporate). Marketing - the management task of identifying and meeting the needs of customers profitably by getting the right product at the right place at the right time. Other definitions of marketing 17.1 Role of Marketing Marketing involves a number of related management functions 17.1 Role of Marketing Marketing objectives and corporate objectives The Mcdonalds marketing in Malaysia in Malaysia’ case above provides an example of a clear marketing objective. Other examples of marketing objectives include a measurable increase in: 17.1 Role of Marketing Marketing objectives and corporate objectives 17.1 Role of Marketing Coordination of marketing with other departments Marketing objectives and marketing decisions cannot be sert or taken into isolation from the rest of the business. 17.2 Demand and Supply Key terms: Equilibrium price- the price level at which demand is equal to supply. Demand- the quantity of the product that consumers are willing and able to buy at a given price in a specific time period. Supply- the quantity of a product that firms are prepared to supply at a given price in a specific time period. 17.2 Demand Demand varies with price. For all normal goods, quantity bought rises when prices fall. 17.2 Demand Other factors affecting level of demand: 17.2 Demand All the changes from other factors can result in a new demand curve. Example: Increase in demand for holidays after an increase in consumer income 17.2 Supply Supply varies with price. Businesses will be willing to supply more of a product if the price rises and will supply less fewer/less of a product as the price falls. 17.2 Supply Other factors affecting level of supply: Activity Task Activity 17.2 Determining the Equilibrium Price Demand and supply can be shown on the same diagram. Equilibrium price- the price level at which demand is equal to supply. If price is higher than equilibrium price unsold inventory, excess supply. If price is lower than equilibrium price Inventory will run out, excess demand. 17.3 Markets Markets are where buyers and sellers meet to engage in exchange. Markets does not have to be a physical place. Online auctions now mean that markets can exist electronically with no physical meeting between buyers and sellers. Markets can also refer to a group of customers who are interested in a product and have the resources to purchase. It can be broken down into: Key terms: Market segment - a subgroup of a whole market in which consumers have similar characteristics. Industrial market- the selling of products by businesses to other businesses, also known as business to business or B2B. Consumer market- the selling of products by businesses to the final end user also know as business to consumer or B2C. Industrial and consumer markets Industrial market- the selling of products by businesses to other businesses, also known as business to business or B2B. Examples: specialist machines, trucks, office supplies. Consumer market- the selling of products by businesses to the final end user also know as business to consumer or B2C. Examples:mobile phones, holidays and fashion clothing Local, national and international markets Local markets- sell in local areas, local customers. Examples: laundries, florist shops, hairdressers, car repair garages Consumer market- the selling of products by businesses to the final end user also know as business to consumer or B2C. Examples: mobile phones, holidays and fashion clothing Local, national and international markets Expansion… National markets- selling products throught the whole country Examples: banks, supermarket chains, large clothing retailers Why? Greater potential to increase sales International markets- multinationals that operate and sell in many different national markets our countries. Why? Greatest sales potential, a significant strategic decision. Customer (or market) orientation and product orientation Customer (or market) orientation- an outward-looking approach that bases product decisions on consumer demand, as established by market research. Product orientation - an inward-looking approach that focuses on making products that can be made- or have been made for a long time - and then trying to sell them. Customer (or market) orientation Customer (or market) orientation- an outward-looking approach that bases product decisions on consumer demand, as established by market research. -requires market research and market analysis to measure present and future demand -customers and their needs come first. -businesses will attempt to produce what consumers want to buy. -this is an important approach especially in a fast-changing, volatile consumer market. Customer (or market) orientation Benefits: Product-oriented business Product orientation - an inward-looking approach that focuses on making products that can be made- or have been made for a long time - and then trying to sell them. -assumes there will always be a market for the product. Evaluating difference between customer and product orientation Quick read: Key terms: Market size - the total value (or quantity ) of sales of all producers within a market in a given time period. Market growth- the percentage change in the total size of the market (volume or value) over a period of time. Brand leader - the brand with the highest share of the market Market share and market growth Market size can be measured in two ways: 1. Quantity of sales (units sold) 2. Value of products sold (revenue) By all businesses in the market over a given time period. Market size is important for 3 reasons: Market Growth Some markets are obviously growing faster than others Some markers are declining rapidly. Example: sales of desktop computers have fallen rapidly through the years. Remember; entering a rapidly growing market is good but there might be many competitors entering the market at the same time. So market share and profit margin may be low. Market Growth Implications of a change in market growth Market share Market share, and an increase in it, is an effective way to measure the relative success of one business’s marketing strategy against those of its competitors. Market share formula: Market share Market share Quick read Activity Task 17.4 Consumer marketing (B2C) and Industrial Marketing (B2B) Classification of Products Consumer Products -goods or services sold to end users. -good produced for sale to individuals and households Industrial Products -goods or services sold to businesses – goods produced for industrial use 17.4 Consumer marketing (B2C) and Industrial Marketing (B2B) Classification of Products 17.4 Consumer marketing (B2C) and Industrial Marketing (B2B) Quick read 17.5 Mass marketing and Niche Marketing 2 Different Approaches to Marketing Strategy Mass Marketing -selling standardised products or ranges of products in the same way to the whole market Niche Marketing -identifying the exploiting a small segment of a larger market by developing differentiated products to suit that segment. 17.5 Mass marketing and Niche Marketing 2 Different Approaches to Marketing Strategy Mass Marketing -selling standardised products or ranges of products in the same way to the whole market -as consumer incomes rise and consumers develop more individual needs, mass marketing is becoming less frequently used. Examples: cola drinks, toothpaste, washing-up liquid. 17.5 Mass marketing and Niche Marketing 2 Different Approaches to Marketing Strategy Niche Marketing -identifying the exploiting a small segment of a larger market by developing differentiated products to suit that segment. -focused on avery small section of the total market.Might not be filled up yet by competitors. Examples: Versace designs, clinique perfumes, extreme sports clothing, dollar stretcher retail shops and sell only very cheap items, attracting low-income segment of the market. Advantages of Mass Marketing Disdvantages of Mass Marketing Advantages of Niche Marketing Disadvantages of Niche Marketing 17.6 Market Segmentation Market segmentation- the identification of different groups of customers with common needs within a market and the marketing of different products or services to those consumer groups. Hi mom -customer focused -sometimes referred differentiated marketing -for market segmentation to be successful, businesses must research the total market carefully. 17.6 Market Segmentation Quick read Methods of Market Segmentation Successful segmentation requires a business to have a clear analysis of the consumers and its target market. The aim is to build a picture of a typical consumer anf their key characteristics. Customer profile - a quantified picture of a business’s consumers showing data about their age groups, income levels, location, gender and social class, Methods of Market Segmentation 3 methods of market segementation Geographic differences - consumer tastes often vary between different geographic areas Example: heating and refrigeration business will need to market different products to Malaysia compared to Finland. -accurate and detailed market research is essential before entering international markets. Methods of Market Segmentation 3 methods of market segementation Demographic differences - age, gender, income, family size, social class and ethnic background can all be used to segment the market. Example: construction company will decide- build retirement homes? New block of apartments? - decide appropriate one so it adapt to the price and promotion strategies. -income and social class are important demographic factors that identify socioeconomic group and use to segment the market. Methods of Market Segmentation Quick read: Main socioeconomic groups Methods of Market Segmentation 3 methods of market segementation Psychographic factors - factors that refer to differences between people;s lifestyles, personalities, values and attitudes. Example: middle class families spend considerable sum of money for private education which might not be a priority for other social groups, or lifestyles priorities like gym memberships. Advantages of Market Segmentation Disadvantages of Market Segmentation 17.7 Customer relationship Marketing Customer relationship marketing (CRM) - using marketing activities to build and establish good customer relationships so that the loyalty of existing customers can be maintained. At the Heart of CRM is communication with the customer to gain information. Aim is to gain as much information about each existing customer. This includes income, product preferences, buying habits and so on. Objective of CRM: develop customer loyalty to ensure the customers buy from the business in the future. 17.7 Customer relationship Marketing Quick Read Costs and Benefits of CRM Costs and Benefits of CRM Activity Task Activity Task Activity Task