IB Business & Management

Unit 4.1 The Role of Marketing

Lesson 1: The Market
pp. 439-443
1. Think about it…
• “The greatest pleasure in life is doing what
people say you cannot do.” – Walter Bagehot
(1826-1877), British journalist
– Why do you think he said this?
– How does this pertain to marketing?
– What do you think?
– …
 2a. An overview…
• Remember back in Unit 1.1 and Unit 1.2, when we talked about
NEEDS and WANTS?
– Needs are?
• Necessities you must have to survive: food, shelter, water, NOT your
cell phone!
– Wants are?
• The desires you have: nice car, cell phone, new computer, etc.
• Marketing addresses people‟s needs and wants.
– It is about making customers want to buy a product.
– Looks at the reasons why people decide to buy
• The price, color, size, special feature of the product.
– Marketing takes a want and turns it into a need.
– …
 2b. An overview…
• Remember the activity we did? To create a product based on a person‟s need.
– Think about this:
• Do you know this man?
• Bob Marley (1945-1981)
– Once said that he did not NEED a BMW.
– So, you are in the marketing department…
• How are you going to turn this product into
a need?
• The 4 P‟s of marketing and your departments main objectives are:
– Products
– Price
– Place
– Promotion
– …
 3a. The Market
• What is it and why is it important?
– It is a place where customers and suppliers trade.
– It exists where there is a demand for a product and business try
to satisfy that demand.
• Two kinds of markets:
– Consumer markets: the general public
– Industrial / Commercial markets: business and governments
• Within each market there will be rival products and suppliers.
– Each business will be interested in three things:
• 1. the size of the market
• 2. the growth rate within the market
• 3. the firm‟s share of the market.
– Lets take a closer look at each one….
 3b. The Market: Market Size
• Markets will differ in size.
– For example let‟s look at the fast food industry…
• Is there room for growth? Why do you think so?
– What about the car industry?
– What about the market for horse saddle‟s?
• Now, the market size can be measured in a number of ways:
– A. Customer base:
• The total number of potential customers:
– Think about expanding into China…how many people live there?
How many are between the ages of 22-29?
– Think about an online business and the internet. How many
people does the internet serve?
– …
 3c. The Market: Market Size
– B. Barriers to entry:
• The total number of suppliers in the market.
• The kind of industry, think about entering the oil and aircraft industry…easy
to do? Huge set up costs….
• With low barriers to entry there will be a lot more firms operating there on a
smaller scale.
– C. Location, Location, Location :
• Some markets focus on certain countries / regions.
• Do you know Adidas?
– They are the market leader in Tae Kwon Do equipment.
 3d. The Market: Market Growth
• Refers to an increase in the size of the market over a period of time.
– This is measured by an increase in the value or volume of sales in the
market.
– For example:
• If sales revenue in a market rises from $200 million to 220 million,
the market is to have grown by 10%.
• …
 3e. The Market: Market Share
• There are many rival products and firms in the market within any given market.
• Your business also contributes to this market share. But how by how much?
– Market share = sales revenue of firm x 100
total sales revenue in market
• If you increase your market share you will increase your profits.
– But having the largest market share might not be the most profitable. Think about your
costs 
• Other benefits to having a larger market share:
– Status being number one; a market leader.
– Economies of scale
– Pricing power
– So how do you increase your market share?
• Promotion of brands (Unit 4.3)
• Product development (Unit 5.6)
• Motivation / training (Unit 2.5)
• Establish property rights (Unit 3.5 and 5.6)
• Use more efficient channels of distribution (Unit 5.6)…
 4a. The Nature of Marketing
• There is no single, set definition of the term marketing:
– Marketing objectives of each and every firm differ.
– The Chartered Institute of Marketing defines it as “the management process
involved in identifying, anticipating and satisfying consumer requirements
profitably.” Wow! That‟s a mouth full.
– Al Reis and Jack Trout believe it is “the battle for your mind.”
– Your textbook gives more definitions please read them. Get on the internet and
see what is out there as well.
– But most importantly get this book and read it:
• It is all about being FIRST in the mind of the consumer.
– Don‟t believe me? Think about it,
• Who was the second man to walk on the moon?
• Who was first to invent the car? Who was second?
• Who was the second person to fly across the Atlantic?
• 
• …
 4b. The Nature of Marketing
• Marketing will either make or break a company.
– It will affect the sales and profits of the organization.
– Marketing alone will not guarantee success either; marketing must work
along side of other functional areas within a business such as:
• Operational management:
– The production department will work very closely with the marketing
department. Why?
• Finance:
– Together they will set appropriate budgets. Why is this important?
• Human resource management:
– Marketing data can help this department to identify staffing needs.
• …
IB Business & Management
Unit 4.1 The Role of Marketing
Lesson 2: Market & Product Orientation
pp. 444-450
 1. Product Orientation
• Marketing has changed over the years from:
– product-orientated (getting customers to buy the product) to
– market-orientated marketing (meeting actual needs or desires of customers).
• Product orientation:
– It is inward looking.
– The focus is on selling products that a company makes, rather than making
products they can sell.
– Businesses hope the customers will buy their product.
– Say‟s Law: Supply creates its own demand.
• Concept today is customers will pay higher prices for a higher quality good.
– These companies assume to know what you, the customer wants.
– This is a very risky strategy to employ.
• You will find out very quickly that you will need, when developing products, to take the
customer into consideration.
• …
 2. Market Orientation
• Also called Consumer orientation.
– This approach is an outward looking one.
– The focus is on making products that a business can sell, rather than selling products that they
can make.
– Main focus is on the consumer in order to:
• Identify
• Design
• Develop and
• Supply products to meet their needs and wants of customers.
• If you ignore your customer, you will lose competitiveness.
– Two main advantages to using this approach:
• Flexibility: respond quicker to changes
• Less risk: by conducting market research, you will have a greater success meeting the wants
and needs of your customers.
• Market orientation approach tend to be expensive because of the market research.
• So how can you decide which approach to use? It will depend upon:
– The market: highly technical products vs. mass consumer market products.
– Organizational culture: “the customer is always right” – market oriented.
– Nature of barriers to entry: not much competition – less customer focused.
– …
 3a. Marketing of Goods & Services
• What is a service?
– Is an intangible product such as a train ride, getting a hair cut.
• There is no ownership of the product and it is perishable.
– Customers pay for services in order to fulfill wants and needs.
• Can you think of any services that would fulfill a want or a need?
• Marketers will use the 4P‟s (marketing mix) for goods; the marketing of services includes three
additional elements:
– 1. People
– 2. Processes
– 3. Physical evidence.
• Together these form the 7 P‟s in the marketing mix.
• Let„s take a closer look…
 3b. Marketing of Goods & Services
• People:
– Remember services depends on the goodwill of all employees.
– How can you ensure good service:
• Appearance and body language
• Aptitudes and attitudes
• Feedback
• Efficiency
• Processes:
– Refers to the way in which a service is provided and delivered.
– If you are selling a service how do you demonstrate to customers the benefits of services?
• Payment methods
• Waiting time
• Customer service
• After-sales care
• Physical Evidence or environment:
– Refers to the tangible aspects of a service.
• What‟s in a 5-star hotel? What do you see when you first walk into a place like this?
• Challenges facing you as a manager in delivering quality customer service:
• Correcting mistakes
• Measuring productivity
• People management
• …
IB Business & Management
Unit 4.1 The Role of Marketing
Lesson 3: Marketing in NPO
pp. 450-454
 1. NPO’s
• Marketing in NPO‟s is somewhat different than the market-led strategies by profit seeking
companies.
– Tends to be more informative
– They use social marketing strategies:
• main aim is not to make a profit, but for the public to take action.
– Donating money…
• Governments and other departments are opting to use this strategy.
– They will also use catchphrases or slogans as a strategy.
• “Your Country Needs You”, a slogan during WWI in England.
– Kotler, a marketing guru, coined the term de-marketing:
• the use of marketing to reduce the demand for socially undesirable products, like
tobacco.
– Funding can be a huge problem for NPO‟s, they will use public relations to give them a
better public image, to increase awareness.
– The use of the internet has help to cut marketing costs down for the NPO‟s.
– They will also strive to increase their distribution channels (Unit 4.6)
– …
 2. Elements of a Marketing Plan
• A marketing plan is a document outlining a firm‟s marketing objectives and the strategies to be used
to achieve these objectives.
– The plan is usually preceded by a marketing audit.
• This is a review of the current position of the firm's marketing mix, in terms of SWOT.
• May address issues of competition, an assessment of the effectiveness of the firm‟s
marketing.
– From the audit you the manager, can now proceed on to the marketing plan. It will include the
following:
• SMART marketing objectives (Unit 1.3).
• Methods for market research / Identifying target markets.
• SWOT of the competitors in the market
• Outline of the marketing mix 4/7 P‟s
• Details of the marketing budget (how much is this going to cost the firm)
• Outline any problems that you may encounter and strategies on how to deal with them.
• Do not forget to use a PEST analysis 
• Main advantage:
– Improves the chances of success.
• Limitations:
– Many firms do not have time or resources to plan their marketing.
– Plans can become outdated very quickly.
– Can be inflexible, do not allow for sudden changes.
3. An idea of a marketing plan
• This next picture was taken from google images at:
[Link]

• Browse the net for other templates of a formal marketing plan to get
a greater understanding on how to create one.

• MS Word and PowerPoint online have pre-made templates you can

use as well. Check them out!

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