Nature and Role of Markets and Marketing
What is marketing?
· “The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services that satisfy individual and organisational objectives” (American Marketing Association)
· Marketing:
o Involves a wide range of activities
o Is directed at ideas and products
o Importance of satisfying exchanges
o Is not limited to the activities of business
· Functions:
o Gathering market information
o Selling
o Distributing
o Promoting and advertising
o Calculating price
o Understanding the product
o Exchanging something of value
o Satisfying people
o Disseminating information
o Forecasting sales
o Serving customers
The role of marketing in the firm and society
1) The marketing plan outlines the strategies to be used to bring the buyer and seller together. The business needs to be able to identify:
a) Where the market is
b) Who will buy the product
c) Why they will buy the product
2) The core of marketing is satisfying existing customer wants
3) Marketing is the revenue generating activity of any business
Types of market
· A market is individuals or an organization who:
o Need or want a product
o Have the purchasing power to purchase the product
o And socially and legally authorised to do so
· 6 Main types of market:
o Resource market
§ Those engaged in primary production, mining, agriculture etc.
o Industrial market
§ Includes industries and business organizations that purchase products to use in the production of other products or in their daily operations
o Intermediate market
§ Wholesalers and retailers
o Consumer markets
o Mass markets
o Niche markets
Production, selling and market orientation – Approaches to marketing
· Production orientated – 1820s-1910s
o Emphasis on producing goods
o Demand for goods is greater than supply
o Taking orders and delivering goods
· Sales orientated – 1920s-1960s
o Emphasis on selling goods
o Demand is less strong
o Advertising and personal selling
· Marketing approach – 1960s-present
o Emphasis on marketing products
o Establishing and maintaining customer relationships
o Identifying consumer needs
o Producing products for customers’ demands
o Coordinated efforts aimed at satisfying customers’ needs
The Marketing Concept
· The marketing concept is a business philosophy which states that sections of the business are involved in satisfying a customers needs and wants while achieving the business’s goals
· The Marketing approach:
o Stage 1:1960s-1980s
§ Shift to customer oriented approach – need to undertake market research and develop a marketing concept
§ The business should direct all of its policies, plans and operations to achieving customer satisfaction. Therefore, the marketing plan needs to become integrated into all aspects of the business.
§ The marketing concept is based on four principles. It must be:
1) Customer oriented
2) Supported by integrated marketing strategies
3) aimed at satisfying customers
4) integrated into the business plan so as to achieve the business’ goals
o Stage 2: 1980s – present
§ Changing socio-economic conditions have seen a modification to the marketing approach
§ Social responsibility – pollution etc.
§ Increase in demand for ecologically sustainable products
· Customer orientation
o Marketing concept philosophy – customer relationship begins at the sale
o MC needs to be adopted by all employees of business to be effective – employees should work towards customer satisfaction by providing positive relations with customers
o When a business bases its marketing decisions on its customers wants
· Relationship marketing
o The development of long term and cost effective relationships with individual customers
o Mass mail outs, etc. are gone
o Creating customer loyalty
o ’80-20’ principle – 80% of sales come from 20% of business’s customers
§ forming a strong relationship with this loyal group should be developed and maintained
Marketing Planning Process
Essential to have a marketing plan
Business environment constantly changing
New markets open, others close
Customers tastes change
Globalisation
Competition
Strategic marketing planning
The process of developing and implementing marketing strategies to achieve marketing objectives
5 Steps in plan
Performing situational analysis, including SWOT and product life cycle analysis
Establishing market objectives
Identifying target market
Developing marketing strategies
Implementing, monitoring and controlling
Continuous process
· Step1: Performing situational analysis
Investigates the marketing opportunities and potential problems
Attempts to answer 2 broad questions Where is the business now?
Where will the business be in the future
Step 2: Establishing market objectives
A statement of what is to be achieved through the marketing activities
SMART
Step 3: Identifying target markets
Who will buy the G or S
The group of customers to whom the business intends to sell its product
Research to identify customers’ needs
Questionnaires, informal interviews, surveys
A business that does not have a clear understanding of why its customers buy its products will be unable to decide the best way to promote, price and present the product
Step 4: Developing marketing strategies
Actions undertaken to achieve the business’s marketing objectives
Marketing mix – combination of four elements of marketing
Business must determine emphasis to be placed on each variable
Step 5: Implementing, monitoring and controlling the marketing plan
Monitoring – comparing actual performance with predetermined performance standards
Market share analysis, profitability by product or territory
If plan is found to be failing, modifications need to be made
Marketing – an evolutionary process
Elements of a marketing plan
Introduction
Marketing plan should be integrated with other aspects of business
Elements in a marketing plan: Situational analysis
Establish market objectives
Identify target markets
Develop marketing strategies
Implementation, monitoring and controlling
Situational analysis
SWOT
Product life cycle
Updating to keep products ‘fresh
Establishing Market Objectives
SMART
Increasing market share
Refers to the business’s share of the total industry sales for a particular market
Expanding the product range: the product mix
Product mix width
The number of products lines
Product mix depth
Number of similar products offered in a specific product line
Broadening geographical representation
The presence of a business’s and the range of its products across a suburb, town, city, state or country
Differences in climates, landforms, customs, can combine to influence customers tastes and preferences
Expansion through export
Market limited in Australia
From the 1980’s Australia began to transform into a more open economy
Advantages include
Increased profits
Achievement of economies of sale
Establishment of new target markets
Access to new technology
Maximising customer service
Responding to the needs and problems of the customer
Most important objectives
Train the staff in how to deal with the customers
Review the product mix
Maintain customer contact
Anticipate market trends by reading and conducting research
Find out what the competitors are offering
Reward staff for excellent customer service
Ask the customers what they want
Identifying Target Markets
Total market approach
Basic food items
Market segmentation approach
When the total market is subdivided into groups of people who share common characteristics
Developing Marketing Strategies
Marketing Mix 4P’s
Product
Quality
Design
Name
Warranty and guarantee
Packaging
Labelling
Exclusive features
Price
Price strategies
Promotion
inform persuade and reminding customers about products
Place
Distribution, intermediaries
Implementing the Marketing Plan
How, where and when
Is the plan integrated with other sections of the business?
How should the business be structured and organised?
Have effective lines of communication between the marketing department and other departments been established?
Who are the best people for the various tats needed to implement the plan?
Are the marketing personnel motivated and focused?
Are all employees familiar with the marketing objectives and strategies