Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably The Chartered Institute of Marketing

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1 What is Marketing? There are a number of different definitions: Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably The Chartered Institute of Marketing The right product, in the right place, at the right time, and at the right price Adcock et al Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others Kotler 1991 Business Studies Online: Slide 1

2 What Do They Mean? Effectively these definitions all mean that: The Consumer is KING (or QUEEN!) As such, if a firm wants to survive it must provide what consumers want Marketing is how firms do this! Business Studies Online: Slide 2

3 The Role of Marketing Price (P) P1 The main purpose of marketing is to shift the demand curve to the RIGHT E.g. An advert may increase awareness and therefore sales Q1 Q2 D1 D2 This increases quantity from (Q1 Q2) thus increasing sales Quantity (Q) Business Studies Online: Slide 3

4 Marketing Within An Organisation The marketing department does not operate in isolation So the objectives of the marketing department must fit in with the corporate objectives that have been set Most objectives relate to: Image Profit Sales So clearly the marketing department has a big role to play Business Studies Online: Slide 4

5 The Marketing Environment Marketing decisions must consider other factors within a business: The Work Force Know How Plant & Machinery Finance Business Studies Online: Slide 5

6 The Internal Environment The facilities available within a firm may influence whether it is product orientated or market orientated Product Orientation Where a firm concentrates on the product or production process because they have the knowledge. E.g. Dyson Market Orientation Where a firm continually reviews and analyses consumer wants, and modifies their products accordingly. Very few firms are purely market orientated Asset Led Marketing A mixture of the two approaches. It recognises that marketing is constrained by other functions of the business Most firms fall into this category Business Studies Online: Slide 6

7 Market Segmentation Most businesses will not treat a market as a single entity Instead they break the market into small pieces, or segments, where the consumers in each segment have similar characteristics For example: The market for music could be segmented in various ways, including: Age ie teenagers will have different tastes to 40 year olds Behaviour ie some buy CDs while others will download Business Studies Online: Slide 7

8 Segmenting The Market There are a number of ways in which this can be done: Geographic Segmentation based on geographic patterns Demographic Segmentation age, gender, income etc Psychographic Segmentation social class Behaviouristic Segmentation behaviour patterns Business Studies Online: Slide 8

9 Positioning The Product Firms will want to identify which segment would be most suitable for their products Ideally a firm will want to enter a market that is growing ie getting bigger, since this means consumers are buying more Firms will also consider their competitors and analyse whether there is any room in the market for them As such a firm will have to consider market share and market growth when positioning a product Business Studies Online: Slide 9

10 Calculating Market Share The share of a market which any one product has can be calculated as follows: Market Share (%) = Value of Product Sales Value of Market Sales For example: At the end of million worth of Walkers Crisps had been sold, in the UK Potato Crisp market where total sales were 1.76 billion As such, the Walkers Crisps brand had a market share of: = 409.6m 1.76bn x 100 x 100 = 23.27% Business Studies Online: Slide 10

11 Calculating Market Growth Market growth refers to an increase in the size of the market for a particular product If the market is shrinking then market growth will be negative E.g. the health club market has grown significantly since 2000: Business Studies Online: Slide 11

12 Market Share Vs Market Growth Ideally a firm will want a big share of a growing market However, this is not always possible, e.g: In 2002 Nestlé Rowntree had sales of 0.85 billion in the UK confectionery market in which sales totalled 4.69 billion, giving them a market share of 18.12% In 2003 Nestlé Rowntree had sales of 0.78 billion in the UK confectionery market in which sales totalled 4.88 billion, giving them a market share of 15.98% This means that Nestlé Rowntree s market share decreased by 2.14% in a market that grew by 4.01% Business Studies Online: Slide 12