Unit 3.1 business

 Unit 3.1 - Setting marketing objectives

Marketing - 

The management process responsible for identifying, anticipating and satisfying customer requirements profitability. 

- Chartered institute of Marketing (CIM) definition

It is about more than just advertising

Marketing involves a range of activities including:

- Market research 

- Setting prices

- Designing and using promotion methods, including advertising

- Designing the product and packaging 

- Deciding where to sell the goods/services

- Managing distribution channels

- Customer service and communicating with customers

- The method of selling the good/service

Purpose of marketing - 

Anticipating consumers wants - This can be done through carrying out market research to discover what the customer wants and what might make them purchase the good/service. It can also be used to analyse the market the firm intends to enter, including market size, number of rivals, current trends, average prices charged, etc. to know how best to deal with them when designing their strategy.

Satisfying customers' wants - Once firms understand the market they can design a marketing strategy to attract customers and build a company brand and reputation. That business will use a range of variables known as the marketing mix (the 'Seven Ps')  to do this.

Meeting the needs of the business - Marketing should help ensure a firm achieves its aims and objectives, such as survival, sales growth, market share gains, profit, maximisation, social responsibility and ethics etc.

Value pf setting marketing objectives -

Business must set marketing objectives to determine what they must do in their marketing strategy to help achieve their overall company objectives.

Marketing objectives: The specific goals/targets of the marketing department. They must be in line with the firm's overall corporate objectives.

Market size and sales value -

Market size: The total volume of sales of a product or the value of the sales of a product.

Sales volume: Measures the number of items sold or produced

Sales value: Measures the financial worth of items sold

Firms may set objectives to maximise their sales volume or value or may set targets simply to maintain what they have particularly in different times.

Market size can increase by either convincing consumers to buy more goods/services or to pay more for the same amount.

A large market size will attract many competitors so many firms will prefer to operate in smaller niche markets. (For example, Hornby operating in the model railway business rather than other larger mass appeal toy markets.)

Other marketing objectives - 

Increase size - like sales revenue , market share, sales volume

Market positioning - Appealing to particular or new start up firms, those in difficult financial positions and during a recession

Successfully launch a new product or end unsuccessful products

Increase product awareness

Innovation and developing new products

Differentiation - Creating a unique selling point and making the brand stand out from rivals

Add value to existing products - Methods to ensure consumers are willing to pay a high price for the product/service, such as high quality, strong brand image, excellent customer service etc.

Market and sales growth - 

Sales growth: The percentage change in sales (volume or value) over a period of time for specific brand

Market growth: \the percentage change in sales (volume or value) over a period of time for whole market

Sales and market growth is a percentage change which is an essential calculation. To work out percentage change between two figures you must follow the next calculation.

Percentage change = new figure - original figure x 100

                                     Original figure

So sales growth and market growth are calculated the same way.

Market growth : new market size - original market size x 100

                                                                      original market size

Sales growth : news sales - original sales x 100

                                                             original sales

Firms will want to enter markets that are growing to maximise sales. However market growth will attract many rivals .

Market growth can be difficult to achieve for one firm so they may set targets new consumers, developing new products or by targeting new consumers, developing new products or by completely diversifying (new products in new markets)

Factors influencing market growth -

Economic growth - If a country's economy is growing, employment, pay levels and therefore consumers disposable income will be higher resulting in better sales and market growth, particularly for luxuries such as holidays. The opposite will be true when an economy is in decline although some goods may see sales increase, especially those that focus on low prices such as Primark and supermarket own brands.

Type of product - Luxury products will grow in sales most when the economy in growing and suffer when people are more worried about their spending.

Social changes - Changes in the general public's behaviour will see market growth.

Demographic changes - The changing make-up of the UK population may see certain types of product markets become more popular. Like the UK has an ageing and increasingly diverse population which has seen the growth in certain trends of products that were previously more niche cultural or age specific items.

Change in taste and fashions - Like trends on television such as cookery, or mobile phone popularity causing app sales growth.

Firms can influence what is popular and therefore market growth through their own marketing efforts.

Market share - 

The percentage of the total sales of a product or service achieved by one business compared with the total sales in the market.

Market share (%) = sales of one brand  x100

                               total sales in the market

It is a key measure of a company's success s it compares its sales with those of its rivals.

To increase market share a firm must perform better than its rivals to take some of their customers

Firms often may set objectives to become the market leader by having the highest share in a particular section of the market.

Brand loyalty - 

Brand : The set of physical attributes of a product or service, together with the beliefs and expectations surrounding it - a unique combination which the name or logo of the product or service should evoke in the mind of the audience. (CIM definition)

A brand is designed to differentiate a company from its rivals and it can be represented by names, logos, slogans, etc.

Brand loyalty: A measure of the degree of attachment that a consumer has for a particular brand. Loyal customers are more likely to make repeat purchases and less likely to switch to rival brands.

There is much debate and research in this area but generally it is considered much cheaper to retain existing customers than attract new ones, so brand loyalty is essential.

Brand loyalty is important for firms because:

It will ensure customers return for repeat purchases

Firms will need to spend less on promotions as consumers are already convinced about the brand

Companies may be able to charge higher prices as it reduces a brand’s price elasticity (The amount demand changes as price changes). As consumers are more committed to the brand they may be willing to pay higher prices even if they change. This means they become less price sensitive.

External and internal influences or marketing objectives and decisions - 

The external factors are things outside of the business they often are listed under the heading PESTLE this may  impact what objectives a firm sets. It could include:

Political and legal factors - Government policies impact marketing and what firms can do.

Economic factors - Is the economy in growth or decline? What are disposable income levels? Can the firm compete on price or quality? etc.

Social factors - what are existing tastes and fashions? How do demographic factors impact the company's objectives and actions?

Technological change - How has development in technology impact marketing activities for example social media, mobile phones, apps? How are rivals using technology? 

Ethical and environmental factors - Do consumers care about these issues? Do the company's products cause any negative ethical issues? Is there any legislation in this area? 

State of the market factors - Is there growth in the market? Is the company able to focus on growth or just survival?

Competitor actions - How intense is the rivalry? How well are rivals performing? What will they operate in a niche or mass market?

Customers and suppliers - What do consumers expect from the firm - like service, reliability, etc?

Internal influences inside the business :

Business/corporate objectives - The marketing objectives are set to ensure the market department contributes towards achieving the overall corporate objectives. A business must have an integrated approach to marketing and therefore if a company has established a certain type of image, like high quality products or ethics, then all actions which are guided by objectives must match the brand image established.

Finance - The financial position of the business will determine what resources can be allocated to achieve the objectives. Objectives allow firms to establish their priorities and therefore where finances should be allocated.

Human resources (HR) - The size, skills and motivation of the workforce will determine what marketing objectives can be achieved. The levels of training, customer service, decision making and motivation of the workforce all impact their ability to achieve marketing objectives.

Operational objectives - A company must offer an integrated approach so if quality is a key brand feature than the marketing must focus on this and the product must match. The operation must ensure the company can deliver on promises, like internet sales, delivery times, stock quantities etc.

Type of product -  What is the company known for? Does it have a unique selling point? Has it established a reputation for a particular type of product? Is it a necessity or a luxury? What are the industry standards or marketing and budgets?

Summary -

Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.

However this is very difficult and is impacted by the company’s budget, existing skills, experience, products/services, existing brand image and the action of its rivals.

A successful marketing department must set objectives in line with the overall corporate objectives and differentiate the business enough from its competitors to establish brand loyalty, and sales growth resulting in high market share and profits.