Bm Unit 4.1 Role Of Marketing

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IB Business and Management (Standard Level)
All material taken from the IB Business and Management Textbook:
"Business and Management", Paul Hoang, IBID Press, Victoria, 2007

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Bm Unit 4.1 Role Of Marketing

  1. 1. IB Business & Management<br />Unit 4.1 The Role of Marketing<br />Lesson 1: The Market<br />pp. 439-443<br />
  2. 2. 1. Think about it…<br />“The greatest pleasure in life is doing what people say you cannot do.” – Walter Bagehot (1826-1877), British journalist<br />Why do you think he said this?<br />How does this pertain to marketing?<br />What do you think?<br />…<br />
  3. 3. 2a. An overview…<br />Remember back in Unit 1.1 and Unit 1.2, when we talked about NEEDS and WANTS?<br />Needs are?<br />Necessities you must have to survive: food, shelter, water, NOT your cell phone!<br />Wants are?<br />The desires you have: nice car, cell phone, new computer, etc.<br />Marketing addresses people’s needs and wants.<br />It is about making customers want to buy a product.<br />Looks at the reasons why people decide to buy<br />The price, color, size, special feature of the product.<br />Marketing takes a want and turns it into a need.<br />…<br />
  4. 4. 2b. An overview…<br />Remember the activity we did? To create a product based on a person’s need.<br />Think about this:<br />Do you know this man?<br />Bob Marley (1945-1981)<br />Once said that he did not NEED a BMW.<br />So, you are in the marketing department…<br />How are you going to turn this product into <br />a need?<br />The 4 P’s of marketing and your departments main objectives are:<br />Products<br />Price<br />Place<br />Promotion<br />…<br />
  5. 5. 3a. The Market<br />What is it and why is it important?<br />It is a place where customers and suppliers trade.<br />It exists where there is a demand for a product and business try to satisfy that demand.<br />Two kinds of markets:<br />Consumer markets: the general public<br />Industrial / Commercial markets: business and governments <br />Within each market there will be rival products and suppliers.<br />Each business will be interested in three things:<br />1. the size of the market<br />2. the growth rate within the market<br />3. the firm’s share of the market.<br />Lets take a closer look at each one….<br />
  6. 6. 3b. The Market: Market Size<br />Markets will differ in size.<br />For example let’s look at the fast food industry…<br />Is there room for growth? Why do you think so?<br />What about the car industry?<br />What about the market for horse saddle’s?<br />Now, the market size can be measured in a number of ways:<br />A. Customer base:<br />The total number of potential customers:<br />Think about expanding into China…how many people live there? How many are between the ages of 22-29?<br />Think about an online business and the internet. How many people does the internet serve? <br />…<br />
  7. 7. 3c. The Market: Market Size<br />B. Barriers to entry:<br />The total number of suppliers in the market.<br />The kind of industry, think about entering the oil and aircraft industry…easy to do? Huge set up costs….<br />With low barriers to entry there will be a lot more firms operating there on a smaller scale.<br />C. Location, Location, Location :<br />Some markets focus on certain countries / regions.<br />Do you know Adidas?<br />They are the market leader in Tae Kwon Do equipment.<br />
  8. 8. 3d. The Market: Market Growth<br />Refers to an increase in the size of the market over a period of time.<br />This is measured by an increase in the value or volume of sales in the market.<br />For example:<br />If sales revenue in a market rises from $200 million to 220 million, the market is to have grown by 10%.<br />…<br />
  9. 9. 3e. The Market: Market Share<br />There are many rival products and firms in the market within any given market.<br />Your business also contributes to this market share. But how by how much?<br />Market share = sales revenue of firm x 100<br /> total sales revenue in market<br />If you increase your market share you will increase your profits.<br />But having the largest market share might not be the most profitable. Think about your costs <br />Other benefits to having a larger market share:<br />Status being number one; a market leader.<br />Economies of scale<br />Pricing power<br />So how do you increase your market share?<br />Promotion of brands (Unit 4.3)<br />Product development (Unit 5.6)<br />Motivation / training (Unit 2.5)<br />Establish property rights (Unit 3.5 and 5.6)<br />Use more efficient channels of distribution (Unit 5.6)…<br />
  10. 10. 4a. The Nature of Marketing<br />There is no single, set definition of the term marketing:<br />Marketing objectives of each and every firm differ.<br />The Chartered Institute of Marketing defines it as “the management process involved in identifying, anticipating and satisfying consumer requirements profitably.” Wow! That’s a mouth full.<br />Al Reis and Jack Trout believe it is “the battle for your mind.”<br />Your textbook gives more definitions please read them. Get on the internet and see what is out there as well.<br />But most importantly get this book and read it:<br />It is all about being FIRST in the mind of the consumer.<br />Don’t believe me? Think about it,<br />Who was the second man to walk on the moon?<br />Who was first to invent the car? Who was second?<br />Who was the second person to fly across the Atlantic? <br /><br />…<br />
  11. 11. 4b. The Nature of Marketing<br />Marketing will either make or break a company.<br />It will affect the sales and profits of the organization. <br />Marketing alone will not guarantee success either; marketing must work along side of other functional areas within a business such as:<br />Operational management:<br />The production department will work very closely with the marketing department. Why?<br />Finance:<br />Together they will set appropriate budgets. Why is this important?<br />Human resource management:<br />Marketing data can help this department to identify staffing needs.<br />…<br />
  12. 12. IB Business & Management<br />Unit 4.1 The Role of Marketing<br />Lesson 2: Market & Product Orientation<br />pp. 444-450<br />
  13. 13. 1. Product Orientation<br />Marketing has changed over the years from:<br />product-orientated (getting customers to buy the product) to <br />market-orientated marketing (meeting actual needs or desires of customers).<br />Product orientation:<br />It is inward looking.<br />The focus is on selling products that a company makes, rather than making products they can sell.<br />Businesses hope the customers will buy their product.<br />Say’s Law: Supply creates its own demand.<br />Concept today is customers will pay higher prices for a higher quality good.<br />These companies assume to know what you, the customer wants.<br />This is a very risky strategy to employ.<br />You will find out very quickly that you will need, when developing products, to take the customer into consideration.<br />…<br />
  14. 14. 2. Market Orientation<br />Also called Consumer orientation.<br />This approach is an outward looking one.<br />The focus is on making products that a business can sell, rather than selling products that they can make.<br />Main focus is on the consumer in order to:<br />Identify<br />Design<br />Develop and<br />Supply products to meet their needs and wants of customers.<br />If you ignore your customer, you will lose competitiveness.<br />Two main advantages to using this approach:<br />Flexibility: respond quicker to changes<br />Less risk: by conducting market research, you will have a greater success meeting the wants and needs of your customers.<br />Market orientation approach tend to be expensive because of the market research.<br />So how can you decide which approach to use? It will depend upon:<br />The market: highly technical products vs. mass consumer market products.<br />Organizational culture: “the customer is always right” – market oriented.<br />Nature of barriers to entry: not much competition – less customer focused.<br />…<br />
  15. 15. 3a. Marketing of Goods & Services<br />What is a service?<br />Is an intangible product such as a train ride, getting a hair cut.<br />There is no ownership of the product and it is perishable.<br />Customers pay for services in order to fulfill wants and needs.<br />Can you think of any services that would fulfill a want or a need?<br />Marketers will use the 4P’s (marketing mix) for goods; the marketing of services includes three additional elements:<br />1. People<br />2. Processes<br />3. Physical evidence.<br />Together these form the 7 P’s in the marketing mix.<br />Let‘s take a closer look…<br />
  16. 16. 3b. Marketing of Goods & Services<br />People:<br />Remember services depends on the goodwill of all employees.<br />How can you ensure good service:<br />Appearance and body language<br />Aptitudes and attitudes<br />Feedback<br />Efficiency<br />Processes:<br />Refers to the way in which a service is provided and delivered.<br />If you are selling a service how do you demonstrate to customers the benefits of services?<br />Payment methods<br />Waiting time<br />Customer service<br />After-sales care<br />Physical Evidence or environment:<br />Refers to the tangible aspects of a service.<br />What’s in a 5-star hotel? What do you see when you first walk into a place like this?<br />Challenges facing you as a manager in delivering quality customer service:<br />Correcting mistakes<br />Measuring productivity<br />People management<br />…<br />
  17. 17. IB Business & Management<br />Unit 4.1 The Role of Marketing<br />Lesson 3: Marketing in NPO<br />pp. 450-454<br />
  18. 18. 1. NPO’s<br />Marketing in NPO’s is somewhat different than the market-led strategies by profit seeking companies.<br />Tends to be more informative<br />They use social marketing strategies:<br />main aim is not to make a profit, but for the public to take action.<br />Donating money…<br />Governments and other departments are opting to use this strategy.<br />They will also use catchphrases or slogans as a strategy.<br />“Your Country Needs You”, a slogan during WWI in England.<br />Kotler, a marketing guru, coined the term de-marketing:<br /> the use of marketing to reduce the demand for socially undesirable products, like tobacco.<br />Funding can be a huge problem for NPO’s, they will use public relations to give them a better public image, to increase awareness.<br />The use of the internet has help to cut marketing costs down for the NPO’s.<br />They will also strive to increase their distribution channels (Unit 4.6)<br />…<br />
  19. 19. 2. Elements of a Marketing Plan<br />A marketing plan is a document outlining a firm’s marketing objectives and the strategies to be used to achieve these objectives.<br />The plan is usually preceded by a marketing audit.<br />This is a review of the current position of the firm&apos;s marketing mix, in terms of SWOT.<br />May address issues of competition, an assessment of the effectiveness of the firm’s marketing.<br />From the audit you the manager, can now proceed on to the marketing plan. It will include the following:<br />SMART marketing objectives (Unit 1.3).<br />Methods for market research / Identifying target markets.<br />SWOT of the competitors in the market <br />Outline of the marketing mix 4/7 P’s<br />Details of the marketing budget (how much is this going to cost the firm)<br />Outline any problems that you may encounter and strategies on how to deal with them.<br />Do not forget to use a PEST analysis <br />Main advantage: <br />Improves the chances of success.<br />Limitations:<br />Many firms do not have time or resources to plan their marketing.<br />Plans can become outdated very quickly.<br />Can be inflexible, do not allow for sudden changes.<br />
  20. 20. 3. An idea of a marketing plan<br />This next picture was taken from google images at: http://www.novamind.com/planning/mind-maps/marketing-plan.png<br />Browse the net for other templates of a formal marketing plan to get a greater understanding on how to create one.<br />MS Word and PowerPoint online have pre-made templates you can use as well. Check them out!<br />…<br />
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