4.1 The Role of Marketing

Definition and Nature

Any business caters to Needs or Wants of customers and Marketing exists to address such needs or wants of customers.

  • Needs are products and services that are necessary to human survival such as food, water and shelter

  • Wants are products and services that are not always needed for human survival and growth but is use for entertainment, pleasure and desire of a human. These range from technological products to beauty services.

The nature of Marketing is to research into the particular reasons that a customer would purchase the product or service, these reasons can range from price to the features included to aesthetic reasons. Business rely on marketing to reach out to customers and inform them of their product or service.

What is the Market?

A market, by definition, is a place or process whereby customers and suppliers make a trade. A market can only exist when there is a demand for a particular product or service, and of course a business willing to provide for that product or service.

What are the different types of Markets?

  • Consumer Market = The market that caters to the general public such as clothing, technology or automobiles

      • Cater for private individuals. Pertains to buyers who purchase goods and services for consumption rather than resale.

  • Industrial Market = The market that caters to organizations such as businesses or governments

      • The marketing of goods and services by one business to another.

  • Niche Market = The market that caters to very specific and specialized products or services

  • Producer Market: Producers buy goods and services and transform them into a sellable product, which they sell to their customers for the purpose of making a profit.

Four Main Objectives:

1. Ensure that the right products are supplied to fill the needs and wants of the customers

2. Set the price appropriately for a wide range of customers to be able to purchase it

(Also ensure that the price is better than any competitors)

3. Distribution of products must suit a wide range of customers for convenience

4. Ensure that there is sufficient and effective promotion or marketing of the product/service

Marketing's Relationship with Business

Management

  • Marketing has to know what the Management is planning in the product pipeline in order to prepare promotional material to release to customers

  • Marketing tends to inform the management of what customers want or need in order for the management to tailor their products or services to what customer want/need.

  • However, sometimes management comes into conflict with the marketing team when products or services are released early in order to maximize sales revenues, but these products or services then suffer bugs and issues.

  • The management may wish to raise prices of new products to earn profit, but the marketing department would most likely argue that this is bad for market penetration and that lower prices would entice customers better

Human Resources

  • Marketing data can help a business' Human Resources department to identify staffing needs such as hiring more Research & Development staff and sales personnel to work on an upcoming product

  • A Human Resources department's role in the business is to provide an appropriate population of efficient, effective and highly qualified employees to meet the needs of the company and produce products and services to cater to the business' customers.

  • With digital marketing becoming the new frontier for many companies, human resources departments have had to ramp up recruitment of experienced and qualified programmers, digital art designers and coders in order to create websites and other digital media.

Finance

  • The Finance department must set budgets for the whole company, and due to the marketing department's ever-changing costs (usually fluctuating with the importance of the products launch), the Finance department must ensure that the marketing department has enough budget to execute their duties effectively.

  • Marketing departments in this day and age must innovate their strategies towards more Above The Line methods due to the far-reaching presence of digital media, and so the Finance department must take into account the marketing departments wishes to exceed their original budget in order to gain maximum market exposure.

  • There may be issues and conflicts between Finance and Marketing departments such as:

      • Exceeded budgets due to innovations or over-commercialization

      • Finance wishing to price certain products or services high enough to gain profit, but the marketing department would rather keep the price low in order to gain an advantage in market penetration

        • (low prices = more customers willing to purchase the product/service)

      • Marketing may wish to offer extended credit packages such as interest-free repayment plans to entice customers, but the Finance department would argue that any form of extended credit may lead to potentially company-crippling liquidity problems.

Marketing Goods/Products and Services

  • Intangibility

  • Inseparability

  • Heterogeneity

  • Perishability

  • Product Strategy

  • Price Strategy

  • Place Strategy

  • Promotional Strategy

Market Orientation

A market orientated company is one that organises its activities, products and services around the wants and needs of its customers.

“Outward Looking”

A businesses do not worry about the costs of doing things for the customer; instead they consider the costs of not doing these things

Advantage:

  • Greater Flexibility: Firms can respond quickly to changes in the market as they have access to relevant data and information about customers.With this data they are able to anticipate and forecast market trends

  • Lower Risk: Market oriented firms can be more confident that their products will sell and be more successful.

Disadvantage:

  • Can be very expensive - due to market research requirements

  • No guarantee

Product Orientation

A product-oriented firm has its primary focus on its product and on the skills, knowledge and systems that support that product.

“Inwards looking”

They focus on selling products that they make, rather than making products that they can sell.

Advantage:

  • Quality can be assured and the firm has more control over its operations

  • Economies of scale can be applied

Disadvantage:

  • High Risk - The needs of the market are ignored (because product oriented firms assume they know what the market wants), there is a high failure rate of businesses.

  • Might be more capital-intensive

Commercial Marketing

The use of marketing strategies to meet the needs and wants of customers in a profitable way.

Ethics can play a small role when it comes to commercial marketing due to its slightly invasive or unethical practices

Social Marketing

As any activity that seeks to influence social behaviour to benefit the target audience and society as a whole.

Aids awareness, anti-smoking, anti-drink-driving and unwanted teenage pregnancies are examples of social marketing campaigns.