The role of marketing Chapter 24

Key definitions you must know Marketing is the process of planning and undertaking the conception, pricing, promotion and distribution of goods and services to create and maintain relationships that will satisfy consumer wants.

Market s i z e $9,000,000,000 (9 billion $) Population 312,000,000 $11,000,000,000 (11 billion $) Population 70,000,000 Market size can be measured in 2 ways... 1.The total volume of units sold 2.The total value of units sold In this example, what method have they used? THE TOTAL NUMBER OF SALES IN THE WHOLE MARKET

Market s i z e $9,000,000,000 (9 billion $) Population 312,000,000 $11,000,000,000 (11 billion $) Population 70,000,000 A business can decide whether a market is worth entering A business can use market share to compare themselves to their competitors A business can see if they are growing / declining within a market, this will affect the strategic decisions of the business

Market G r o w t h The market for coffee in the UK is saturated. There is no more room for growth, the maximum number of coffees that can be sold, are being sold. If coffee companies want to expand, they will have to seek out new markets (Asia) THE PERCENTAGE CHANGE IN THE TOTAL SIZE OF A MARKET (VOLUME / VALUE) OVER A PERIOD OF TIME

Market Share Starbucks Costa Pret Nero Market share % = Business sales Total market sales X 100 THE PERCENTAGE OF SALES IN THE TOTAL MARKET SOLD BY ONE BUSINESS

Think... Question – Explain how a business market share can fall even though sales are rising The total market sales are increasing at a faster rate than that of the business sales. Therefore competing business sales will be increasing inline or exceeding the percentage increase in total sales in the market. This is often typical of relatively new products to the market, such as the tablet. Total tablet sales 2011 – 12, – 25,000 Apple 2011 – 10, – 15,000 Samsung 2011 – 2, – 10,000

Consumer & Industrial markets Consumers markets for goods & services bought by the final user (consumer) Industrial markets for goods & services bought by businesses to be used in the production process for other products

Market orientated & Product orientated It is 1968, and a research company set about finding a new and improved super glue, one that would NEVER become unstuck It is my job to invent a super glue,

Market orientated & Product orientated Unfortunately the glue that the scientist invented was not sticky at all, however it never lost its stickyness... You rubbish scientist, you invented a weaker-glue not a super glue Will I ever invent a good product?

Market orientated & Product orientated Then in 1972, a manager from another research business came upon the sad scientist... Im going to help you sell your invention, now... Lets think, how could we sell a weak glue that never loses its stickiness?

Market orientated & Product orientated Well I use it on little sheets of paper to write notes on, which I stick to my desk... Ahaaa, I have just the product, we will call it a post-it note, we will try sell them all over the world.

Market orientated & Product orientated Post-it notes were a success, everybody loved the idea, the scientist became rich and everybody lived happily ever after... Except the scientists first manager, who laughed at his idea. This is an example of product orientated, the product came first then they tried to find a market for the product.

Market orientated & Product orientated It is 1955, the 2 nd world war was over, and people were starting to enjoy increased wealth. More and more families were buying cars... What a marvellous invention, I no longer have to travel using a horse

Market orientated & Product orientated Time passed...

Market orientated & Product orientated Awwww Mannnn, I want a car, but I can not afford the insurance and the petrol, I wish someone would make a car that is cheap for insurance and cheap for petrol... I hear you...

Market orientated & Product orientated This is an example of market orientated, customers demand the product first, then the producers made the product

Market orientated & Product orientated Most businesses are usually market orientated. Market orientated is less risky, as you know what the consumer wants, so are guaranteed sales. However, your competitors also know what the consumer wants so there is increased competition. Therefore product orientated businesses are usually the most successful, as their products are innovative and unique, different from all other businesses. Think of...

Higher Level Asset-Led marketing Asset-Led orientated Market orientated Product orientated Sometime a business will listen to consumers demands (market orientated) but will develop a product based upon their own strengths (product orientated) BMW do not make commercial trucks (despite a high demand for these) they have however varied their product line, and now sell a vast range of premium cars.

Higher Level Social Marketing The social marketing approach considers the demands for consumers and the effects the businesses actions would have on society. Social Marketing Corporate Social Responsibility Consumer demands Consumers want cheaper coffee, however Starbucks insists on paying the coffee bean famers a good wage. In order for Starbucks to maintain their profit margins, the price of coffee remains relatively expensive.

Non-profit making marketing Marketing for charities can prove very challenging. Genuine charities have clear fund raising objectives – to support their cause and to ensure the money is raised in the most effective way. A marketing department for a charity must consider: How does the public view our charity, and which type of people are most likely to donate The best, most cost effective way to commutate with donors Assess the effectiveness of promotions and improve their effectiveness. Adhere is unusually high ethical standards To maintain public interest

Theory of knowledge To what extent is it ethical for a charity to spend millions of dollars on effective promotion? [10] Oxfam claim that for every £1 donated, 17p is kept within the organisation. However recent reports have shown that actually the figure is closer to 50p. (so for every 50thb donated, only 25thb will get to the end cause) DfDY 7Y