Chapter 2 – Marketing Marketing

Chapter 2 – Markeng

Markeng

‘Markeng is the management process involved in idenfying, ancipang and

sasfying customer requirements protably.’ Source: The Instute of Markeng.

There are many dierent denions of markeng but it must be remembered

that markeng is not simply about adversing and selling. Any denions that

imply this are incorrect. Markeng aects all aspects of a business and can be

regarded as a philosophy – a way of thinking about how to sasfy customers’

needs and wants. It is an ongoing process and businesses must be prepared to

respond to any changes that take place which impact upon the market in which

they operate.

Markeng involves a wide range of acvies:

• Researching the market – this involves gathering and analysing informaon

on consumers, the marketplace and compeon.

• Analysing the market – this is an examinaon of market condions to

idenfy new opportunies.

• Seng of markeng goals – these must be linked to the business’s overall

objecves.

• Developing a markeng strategy – this involves construcng a plan which

details how the markeng objecves can be achieved. This strategy should

be based around the use of the markeng mix, the 4Ps of markeng:

• product;

• price;

• promoon;

• place.

Markeng involves a whole range of acvies, starng with researching the

market and seng objecves. It also includes developing new products,

designing packaging, establishing the right markeng mix, etc. All these acvies

are aimed at providing goods and services which will sasfy the customer and at

making a prot for the business. The beer the markeng, the more desirable

(or desired) the product or service which is provided for the customer and the

Chapter 2 – Markeng

more prots the business should be able to make.

Dierent types of markets

Businesses need to be aware of the type of market they operate in. The strict denion

of a market is ‘a place where buyers and sellers meet’. This meeng does not have to be

physical; it can, for example, be on the phone or over the internet. The actual marketplace

of a business can be small, local markets with a specic locaon. Other markets are naonal

or internaonal with no single locaon. For example, the world market for oil is a global

market in which buyers and sellers are linked by telephones, faxes and the internet, and

trading takes place in many locaons.

Market orientaon, product orientaon and asset-led markeng

When a business bases its markeng

mix on its percepon of what the mar-

ket wants.

When a business bases its markeng

mix on what the business sees as its

internal strengths.

When markeng decisions are based

on the needs of the consumer and the

strengths of the business.

Market

orientaon

Product

orientaon

Asset-led

markeng

Chapter 2 – Markeng

Market orientaon/market-led

When a business is market-orientated, the business’s markeng acvies will be dictated

by the market. It will at all mes aempt to meet the needs of the market with lile if any

reference to internal strengths of the business. Any business that is market-orientated

thinks that its most important ‘asset’ is its customers. The business believes that, as long as

it is able to idenfy potenal customers, nd out what they want, and then produce that for

them, it will remain successful.

However, there can be disadvantages to being market-led. These disadvantages include:

• high cost of market research to understand the market;

• constant internal change as the needs of the market are met;

• unpredictability of the future, especially from the point of view of sta;

• abandonment of earlier product investment.

Advantages

of market

orientaon

New products

designed to meet

customer needs

Decisions

based on eﬀecve

market research

Flexible to

changes in

taste and

fashion

Chapter 2 – Markeng

Product orientaon

When a business is product-orientated, it will base its products or services on what it

perceives as its internal strengths. Businesses with a product-orientated approach to selling

try to sell whatever they can make, without trying to nd out if it is what the customers

want. Sony grew hugely successful using this policy. The clearest example was the Walkman

cassee player, launched in the late 1970s. Markeng professionals said it would not

sell because it had no recording facility – a generaon of teenagers proved them wrong.

McDonald’s approach with its products is heavily product-orientated, with core products

produced the same way in a range of very dierent internaonal markets. The inial focus is

on developing and making the product then trying to sell it to consumers.

Advantages

of product

orientaon

Focus on

product

development

Increased

economies

of sale

Easier to

apply

producon

management

methods

Focus on

quality

Chapter 2 – Markeng

However, of course there are disadvantages as well. These disadvantages include:

• changes in market structure will not be responded to;

• fashion and taste are not accounted for in the product mix.

Asset-led markeng

The perfect situaon is of course for a business to relate customer taste to the business’s

own strengths. Therefore, a business should nd out what the market wants, and then

ask the queson, ‘How using our skills, knowledge, assets and brands, can we meet these

customer needs?’

Asset-led markeng tries to achieve this – the key word here is ‘led’. Assets such as labour

force skills, management skills, patents, recognised brands or capital, should be used to help

sasfy consumer demand. Idenfy what you are good at and relate this to customer needs.

This relang of internal strengths to market needs should be one of the basic rules of

any business’s markeng strategy as this approach focuses on the most appropriate

opportunies, given the business’s assets.

How to eecvely combine these two factors (internal strength and market needs) can be

demonstrated by examining the use of database markeng.

The growth of store loyalty cards has allowed the development of database markeng.

Using this form of markeng, businesses develop a database of their customers’ acvies,

shopping habits and tastes. They then use this database to target sectors of their market

with dierent oers, promoons etc. This targeted markeng improves the eecveness of

markeng spend.

A simple example of this would be Tesco sending details of their back-to-school children’s

clothes promoons to customers on their database who spend money on sh ngers and

burgers (these customers are likely to have young children). The business has targeted

a market segment that is most likely to buy the promoted product. In this example we

see that the internal strength of the business is the eecve applicaon of IT; this is then

related to seasonal market demand, increasing product sales.

When a business applies asset-led markeng it will benet from several advantages. These

advantages include:

Chapter 2 – Markeng

Advantages

of being

asset-led

Progressive

change

Quality of

output

Strengths

linked to

market

needs

Maximising

return from

assets

Chapter 2 – Markeng

Discussion themes

Explain what is meant by markeng.

‘A business that has an eecve markeng strategy will always be protable.’ Discuss this

statement.

Why do businesses who oer a high quality product somemes fail in the marketplace?

‘Market orientaon has more costs than benets.’ Do you agree with this statement?

‘All businesses should adopt an asset-led markeng approach.’ Do you agree with this

statement?

Watch the two adverts. Discuss whether the products shown are product or customer-

orientated. What advantages come from the orientaon adopted?

Wiltshire Farm Foods (2014)

hps://www.youtube.com/watch?v=kSmrdxNPvIg

Sony Walkman commercial (1983)

hps://www.youtube.com/watch?v=7lipckhgG5g