Lesson 2: The role of marketing Marketing Objectives © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

As looked at last lesson, the purpose of marketing is to: Anticipating consumers’ wants – This can be done through carrying out market research to discover what the customer wants and what might make them purchase the good/service. It can also be used to analyse the market the firm intends to enter, including market size, number of rivals, current trends, average prices charged, etc. to know how best to deal with them when designing their strategy. Satisfying customers’ wants – Once firms understand the market they can design a marketing strategy to attract customers and build a company brand and reputation. The business will use a range of variables known as the marketing mix (the ‘Seven Ps’) to do this. Meeting the needs of the business – Marketing should help ensure a firm achieves its aims and objectives, such as survival, sales growth, market share gains, profit maximisation, social responsibility and ethics, etc.

Marketing aims and objectives The marketing department sets objectives to match what the whole organisation wants to achieve over the year. Marketing objectives often relate to: understanding customer wants and needs developing new products improving profitability increasing market share diversification increased brand awareness and loyalty Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

What types of market research are there? Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. What types of market research are there? What types of data can be collected? Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Why does branding make it easier for larger businesses to bring out new products? Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

How else can a business improve profitability? Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. How else can a business improve profitability? Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

Market share (%) = sales of one brand x 100 Market share: The percentage of the total sales of a product or service achieved by one business compared with the total sales in the market. Market share (%) = sales of one brand x 100 total sales in the market It is a key measure of a company’s success as it compares its sales with those of its rivals To increase market share a firm must perform better than its rivals to take some of their customers Firms often may set objectives to become the market leader by having the highest market share, or to maintain their existing market share or even to increase market share in a particular section of the market. For example, Tesco is currently market leader in the supermarket industry but has seen their market share fall from 30.3 per cent in 2013 to 28.9 per cent with intense competition. Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

Diversification: taking a new product into a new market Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

Brand loyalty is important for firms because: Brand: The set of physical attributes of a product or service, together with the beliefs and expectations surrounding it - a unique combination which the name or logo of the product or service should evoke in the mind of the audience. (CIM definition) A brand is designed to differentiate a company from its rivals and it can be represented by names, logos, slogans, etc. Brand loyalty: A measure of the degree of attachment that a consumer has for a particular brand. Loyal customers are more likely to make repeat purchases and less likely to switch to rival brands. There is much debate and research in this area but generally it is considered much cheaper to retain existing customers than attract new ones, so brand loyalty is essential. Brand loyalty is important for firms because: It will ensure customers return for repeat purchases Firms will need to spend less on promotions as consumers are already convinced about the brand Companies may be able to charge higher prices as it reduces a brand’s price elasticity (The amount demand changes as price changes). As consumers are more committed to the brand they may be willing to pay higher prices even if they change. This means they become less price sensitive. Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public. © Pearson Education Ltd 2017. Copying permitted for purchasing institution only.

Your task You will be split into groups Each group will be given one of the marketing objectives discussed today You must design and deliver a 5 minute presentation on your objective, explaining why it is so important There must be a handout that can be given to other students detailing your findings You must explain: Why it is crucial for a business to achieve this objective How this objective can be achieved Any problems that might occur in trying to achieve this objective Examples of businesses that have achieved this objective