Click to add text 4.1 The Role of Marketing

What is Marketing?  The management task that links the business to the customer by identifying and meeting the needs of customers profitably.  Get the right product at the right price to the right place at the right time.

Marketing involves the management of:  Market research  Product design  Pricing  Advertising  Distribution  Customer Service  Packaging

Marketing and other Business Functions: CMS announces opening 4 new schools. Why would this decision need to be coordinated with other business functions?  Finance  Human Resources  Operations  Marketing

Market Characteristics Market Size Market Growth Competitors and ease of entry Differentiated or homogeneous products Segmentation Let's examine each one....

Market Characteristics - Size Market Size The size of the market is important for 3 reasons: 1. Can assess whether a market is worth entering 2. Can calculate your market share 3. Growth or decline can be identified

What is Market Size?  Total level of sales of all producers within a market. Can be measured by volume of sales (units sold) Can be measured by value of sales (total revenue generated) Either calculation can give you a perception of the market.

Market Characteristics - Growth  The percentage change in the total size of a market (in volume-units or value- revenue) over a period of time. Growing markets may have many competitors so profits may not be as high as expected. The pace of growth  may depend upon external factors  may be affected by technology innovations  may be slow because of a saturated market

Market Characteristics – Competitors and Ease of Entry  Businesses need to be aware of how many competitors in the market and how easy it is for others to join.  The more businesses in the marketplace, the more likely there will price competition.

Market Characteristics – Differentiated or homogeneous  Homogeneous products are goods that are physically identical or viewed by customers to be identical. Bottled water, gas, and milk  It is difficult to charge premium prices for these goods.

Market Characteristics – Segmentation  Segmentation refers to breaking up the market into smaller groups that have similar needs. Target Marketing – is specific marketing strategies used to meet the needs of the segment. It tries to meet the needs of this segment only. Mass Marketing attempts to reach as many people as possible whether they are likely buyers of our product or not.

Marketing GOODS vs SERVICES Services differ from goods: Services are consumed immediately Services cannot be returned, repaired, or replaced It is difficult to compare service quality Trained staff (people) are important to successful service Because of these differences marketing of services is different, too!

Marketing GOODS vs SERVICES Marketing Services is about relationships! Building Trust Time for delivery of service Deliverability Relationships Perceived Value

Marketing Approaches  Market Orientation An outward-looking approach basing product decisions on consumer demand, as established by market research.  Product Orientation An inward-looking approach that focuses on making products that can be made or have been made for a long time – and then trying to sell them  Social Marketing This approach considers the consumer needs as well as the society needs.

Market Oriented  Requires market research to determine what customer want to buy -New products less likely to fail -Product life span is likely to be longer -Continuing feedback from consumers to keep product fresh

Product Oriented  Businesses invent products they believe will be useful and consumers will want. Pharmaceutical and electronics  Produce high-quality goods that consumers will value Safety equipment or gourmet foods

Social Marketing  Social marketing includes multiple stakeholders usually acts in socially responsible way. Balances 3 concerns: profits, consumer wants, society's interest Difference between short-term wants (prices) and long-term welfare (protecting the environment) Business aims to meet consumer wants in a socially responsible way.

Market Leadership  The percentage of sales in the total market sold by one business can compute your market share. Market share% = firm’s sales for time period total market sales for time period X 100 Market Leadership: A business has the highest market share of all the firms that operate in a market.

Market Leadership Benefits: Sales are higher than competitors Prominent shelf space in stores Not necessary to discount Advertising advantages Recruitment of the best employees Issues: Must continue to do better – the pressure is “on” Attention to market share could erode profitability

Market Objectives Goals set by for the marketing function and should be aligned with corporate aims of the business. For-Profits: Increase market share Increase total sales Increase customer satisfaction Create a brand identity Non-Profits: Maximize revenue Increase recognition of the organization Promote work or the organization to wider audience

Market Strategies Changes in customer preferences over time make it necessary for marketing to always be researching and watching. Some current trends in consumer preferences: - Fuel efficient cars - Healthy food choices - Surface computing - Informal business clothing

Market Strategies Innovation: Rise of Social Networking Ethical Consideration: Target advertising to children Cultural Differences: Could lead to bad publicity and misunderstandings