17.

1 Role of marketing
Marketing is the management process responsible for identifying, anticipating and
satisfying customer requirements profitability

Functions involved in marketing:

●​ Market research
●​ Product design and packaging design
●​ Pricing, advertising and distribution
●​ Customer service

Marketing objectives and corporate objectives

●​ Market share
●​ total sales
●​ average items purchased per customer visit
●​ frequency of shopping by loyal customers
●​ Customer loyalty
●​ Number of new customers
●​ Customer satisfaction
●​ brand identity
To be effective, they should:
●​ Be linked to corporate objectives and be focused on helping achieve overall targets
●​ Be determined by senior management, because the key marketing objectives will
impact on the markets and products a business trades for years to come
●​ be realistic, motivating, achievable, measurable and clearly communicate to all
departments
Importance:
●​ provide a sense of focused direction for the marketing department
●​ Success can be measured against the targets set
●​ Can be broken down into regional and product sales targets
●​ Form the basis of marketing strategy. Examples of marketing strategies are:

●​ Penetrating existing markets more fully by selling more to existing and

new customers
●​ Entering new markets in other countries
●​ developing new, or updating existing, products

Coordination of marketing with other departments

Finance
●​ The finance department will use the sales forecasts of the marketing department to
help construct cash flow forecasts and operational budgets
●​ Finance department must ensure the capital needed is available for the budget
Human resources
●​ Sales forecasts will be used by human resources to help prepare a workforce plan.
For example, additional workers needed in sales team and production to increase
sales
●​ Ensure the recruitment and selection of qualified and experienced workers

Operations
●​ Market research data will play a key role in new product development
●​ The operations department will use sales forecasts to plan the capacity needed
17.2 Demand and supply

Demand
Supply
Determining equilibrium price

If the price is higher than equilibrium price, there will be unsold inventory – excess supply.
Prices will be lowered by suppliers.
If the price is lower than the equilibrium price, suppliers can make higher profit by raising the
prices to equilibrium level.

17.3 Markets

Industrial vs Consumer Markets

●​ Industrial markets involve products bought by businesses (e.g., machines, trucks,
office supplies).​

●​ Consumer markets involve products bought by individuals for personal use (e.g.,
phones, holidays, clothes).​

●​ Different sales strategies are needed for each type.​

Local, National, and International Markets

●​ Local markets: Small businesses serving local customers (e.g., hairdressers, florists).​

●​ National markets: Larger businesses selling across a country (e.g., banks,

supermarket chains).​

●​ International markets: Multinational businesses selling globally; expansion requires

adapting marketing to different cultures, tastes, and laws.​
Customer Orientation vs Product Orientation
●​ Customer orientation: Focuses on identifying and meeting customer needs through
market research.​

○​ Reduces risk of product failure​

○​ Leads to more profitable, longer-lasting products​

○​ Allows continuous adaptation to consumer preferences​

●​ Product orientation: Focuses on developing products first, assuming demand will

follow.​

○​ Still exists in sectors like pharmaceuticals and electronics​

○​ Prioritizes innovation and high-quality production, especially in areas where

safety and performance matter (e.g., medical equipment)

Difference between customer and product orientation

Customer Orientation: Benefits and Limitations

●​ While the trend favors customer orientation, it has drawbacks:​

○​ Constant market research is costly.​

○​ Chasing every consumer trend can waste resources and reduce focus.​

○​ Offering too much choice can be inefficient.​

Product Orientation Still Has Value

●​ Innovative products can succeed without prior market research (e.g., Facebook).​

●​ Product orientation can lead to high profits if innovation meets consumer demand.​

Key Point

●​ Market research alone doesn't guarantee success. Timing, competition, and the
overall marketing strategy are also crucial in today’s global market.
Market Share and Market Growth

Market Size

Measured by:

●​ Quantity of sales (units sold)​

●​ Value of sales (revenue)​

Importance:

●​ Helps assess if a market is worth entering.​

●​ Allows calculation of a business’s own share.​

●​ Identifies market growth or decline over time.​

Market Growth

Markets grow or decline at different rates. A fast-growing market is not always ideal due to
higher competition and lower profit margins.

Factors Affecting Market Growth:

●​ Economic growth rate​

●​ Changes in consumer income​

●​ New market and product developments​

●​ Consumer taste changes​

●​ Technological innovation​

●​ Market saturation​

Implications of a Change in Market Growth

Increased market growth Reduced market growth

●​ Sales will increase if the business´s ●​ Sales will increase more slowly even
market share remains the same if the business's market remains the
●​ It may be possible to increase prices same
and profit per unit ●​ Competitors might reduce prices to
●​ Increased sales could lead to cost increase sales
 savings ●​ Lower prices might result in lower
●​ More business might be attracted to profit per unit
the market ●​ Businesses might consider
expanding into faster-growing
markets

Market Share

Used to measure a firm’s performance relative to competitors.

Formula:

Market Share = (Sales of business in time period / Total market

sales in time period) × 100

Higher market share = better marketing effectiveness.​

The product with the highest share = brand leader.

Implications of an Increase in Market Share

●​ Higher sales and profits​

●​ Retailers more likely to stock/promote the brand​

●​ Brand leader gains promotional and pricing advantages​

●​ Brand popularity influences consumer buying​

Implications of a Fall in Market Share

●​ Sales likely to fall unless market grows quickly​

●​ Less retailer interest in stocking product​

●​ Bigger discounts needed to attract retailers​

●​ Loss of brand leader status = less promotional appeal​

Measuring Market Growth/Share

Can be measured by:

 ●​ Volume: Number of units sold​

●​ Value: Total revenue from sales​

Example (jeans market):

●​ Volume: 24M to 26M pairs = 8.33% increase​

●​ Value: $768M to $936M = 21.88% increase​

Firms choose the method (volume/value) that best suits their positioning. Low-volume,
high-value firms prefer value-based metrics.

17.4 Consumer marketing (B2C) and industrial

marketing (B2B)
Classification of Products
Products can be classified into consumer and industrial products.

Consumer Products

●​ Convenience products: Frequently bought, often on impulse (e.g. soft drinks,

sweets).​

●​ Shopping products: Require planning and research; bought less often (e.g. washing
machines).​

●​ Speciality products: Infrequently bought, high-priced, strong brand loyalty (e.g. cars,
designer clothes).​

Industrial Products

●​ Materials and components: Used in production (e.g. steel, motors).​

●​ Capital items: Machinery, vehicles, equipment (e.g. lathes, IT systems).​

●​ Services and supplies: Business services/utilities (e.g. power, IT support).​

Key Differences in B2B (Business-to-Business) Selling

●​ Industrial products are usually more complex and require specialised sales and
support.​

●​ Industrial buyers have more market knowledge and require professional sales staff.​

●​ Purchases are made after detailed consideration—not impulse.​

●​ Advertising is often done via trade fairs or direct contact, not mass media.​

●​ Industrial markets are smaller and may need product customization (e.g. custom
elevator systems for specific buildings).

17.5 Mass marketing and niche marketing

Mass market
●​ This large market is made up of customers wiling to purchase standardised product
●​ High sales levels allow for high levels of production
●​ Low price is key element in selling this

Niche market
●​ Customers want to buy differentiated
●​ Often small size
●​ Market research is often necessary to establish customers’ special needs

Advantages and disadvantages

Advantages mass marketing Disadvantages of mass marketing

●​ Lower average costs ●​ Lack of differentiated products and

●​ Cost advantages can lead to lower marketing does not appeal to many
price reinforcing the product in the consumers
market ●​ Focus on low prices doesn't help
●​ Mass marketing can result in establish a premium brand image
extensive publicity for the business ●​ Technological or other changes
could lead to fall in demand of
standard product wich can be
 overdependant and be a risk

Advantages of niche marketing Disadvantages of niche marketing

●​ Small businesses can survive and ●​ Small market niches don't allow
thrive in markets dominated by economies of scale
larger firms ●​ Limited scope for business growth
●​ An unexploited niche has no ●​ Business is vulnerable to market
competition change
●​ Exclusive marketing can be used by ●​ If selling in a niche market is
larger firms to create status profitable, this is likely to attract
competitors.

17.6 Market segmentation

Methods of market segmentation

Geographic Differences

●​ Consumer tastes vary by location due to culture, climate, and society.​

●​ Businesses adapt products and marketing by region (e.g. different heating products
for Malaysia vs. Finland).​

●​ Opposite of pan-regional marketing (e.g. pan-European), which may fail if local

preferences differ.​

●​ Promotions and advertising must align with local laws, cultures, and languages.​

●​ Market research is crucial before entering new international markets.​

Demographic Differences

●​ Demography studies population data like age, gender, income, family size, social
class, and ethnicity.​

●​ Helps businesses target appropriate market segments (e.g. senior housing vs. young
singles).​

●​ Businesses tailor pricing and promotion strategies to the chosen segment.​

Socioeconomic Groups:

●​ A – Higher managerial/professionals (e.g. CEOs, lawyers)​

●​ B – Managerial/professionals (e.g. teachers)​

●​ C1 – Supervisory/clerical/junior management​

●​ C2 – Skilled manual workers​

●​ D – Semi/unskilled manual workers​

●​ E – Casual workers/unemployed​

●​ Job roles affect income and spending patterns (e.g. golf vs. budget activities).​

Demographic Acronyms:

●​ DINKY – Double Income No Kids Yet​

●​ NILK – No Income Lots of Kids​

●​ WOOF – Well-Off Older Folk​

Psychographic Factors

●​ Based on lifestyle, personality, values, and attitudes.​

●​ Social class influences spending (e.g. private education for middle-class families).​

●​ Preferences for ethical products (e.g. Fairtrade, organic) define some market
segments.​

●​ Lifestyle choices (e.g. fitness interest) impact demand (e.g. gym memberships).​

●​ Personality traits influence product choices (e.g. adventurous people drawn to

extreme sports).
Advantages and disadvantages of market segmentation

Advantages Disadvantages

●​ Businesses can define their target ●​ Research and development and

market precisely and design and production costs might be high as a
produce goods specifically aimed to result of needing to make and
those groups market different product variation
●​ Identification of gaps in the market ●​ Promotional costs might be needed
and groups of consumers not for different segments
commonly targeted ●​ Production and inventory holding
●​ Differentiated marketing strategies costs will be higher than for
can be focused on different target producing and selling just one
markets undifferentiated product
●​ Small firms are unable to compete in ●​ By focusing on one or two limited
the whole market so they specialise market segments, excessive
in segments specialisation could lead to
●​ Price discrimination between problems if consumers in those
consumer groups segments change their purchasing
habits significantly
●​ Extensive market research is
needed to identify market segments
and their needs

17.7 Customer relationship market

●​ Main goal: Build customer loyalty to encourage repeat purchases and reduce the
need for costly customer acquisition.​

●​ It’s cheaper to retain existing customers than to attract new ones.​

●​ Loyal customers are less likely to switch to competitors.​

Core Strategy:

●​ Focuses on gathering detailed customer data (e.g. income, preferences, habits) to

tailor marketing efforts.​

●​ This creates personalised marketing rather than mass marketing.​

Key CRM Tactics:

●​ Targeted marketing – Offering products based on previous purchases.

 ●​ Customer support – Excellent after-sales service and call centres to build trust.​

●​ Regular communication – Updates on offers, products, and services.​

●​ Use of social media – CRM tools monitor customer feedback and trends via
platforms like Confirmit or Sametrix to inform product and marketing decisions.

Costs and benefits of CRM

Costs Benefits of CRM

●​ IT systems and software are needed ●​ For businesses with existing

and employees need to be trained to customer base it is cost-effective
respond to costumer feedback ●​ Sustainable strategy
●​ Effective campaigns may require ●​ Loyal customers often recommend
external consultancy the business
●​ CRM needs an existing customer ●​ Costs less per customer than trying
base to be established first before to attract new costumers
investing in CRM.
●​ It may be costly to respond to each
customer’s feedback