Chapter 17 - The Nature of Marketing
Lesson Objective: To understand the basic concepts in Marketing
In your opinion, what is Marketing?
Marketing is a business function that involves various activities:
Market Research;
Product Design;
Pricing;
Advertising;
Distribution;
Customer Service;
Packaging.
In a nutshell, marketing is about:
Identifying and understanding customer needs of a target-market through Market Research and then trying to satisfy those needs better than the competition by making strategic decisions about product design, pricing, promotion, and distribution.
There are some important Marketing concepts we need to fully understand before diving in:
Market:
Group of consumers interested in a product, with resources to purchase it legally.
Related concepts: potential market, target-market.
Human Needs and Wants:
Needs are requirements someone wishes to satisfy (food, clothing, shelter, knowledge, recognition, affection, self-esteem, self-expression);
Wants are not essential for survivor but specific to an individual need.
Value and Satisfaction:
Consumers consider a product valuable when it brings them satisfaction at a reasonable price.
The Marketing department of a business has its own separate objectives. However, Marketing objectives are set to support the business' corporate objectives. Marketing objectives are executed according to a Marketing Strategy.
- Marketing Objectives are set by senior management - they are considered strategic (related to product, markets, etc.).
- They ought to be linked and supportive of corporate objectives;
- They also follow the SMART framework and have to be clearly communicated to all departments within the organization.
They also follow the same degree of importance as corporate objectives:
They need to provide clear directions to the marketing department;
They allow for progress to be matched against the objective (tracking);
They can be broken down in regions and/or products for better management;
They are the basis of the marketing strategy.
Here are some quick yet common examples of Marketing Objectives:
Increase in Market Share
Increase in Sales (Volume and/or Value)
Increase in the average number of items purchased per customer per visit
Increase in the frequency that loyal customers shop within the brand
Increase in the percentage of customers who are/become returning customers
Increase in the number of new customers
Increase in customer satisfaction
Increase/strengthen brand equity (the value of the brand in the eyes of the consumers).
It is not because Marketing has its own objectives that it is separate from the entirety of the business. In fact, Marketing Objectives are strictly connected to Corporate Objectives and the Marketing Department closely coordinate its activities with other departments of the organization:
Marketing vs. Finance: sales forecasts made by the marketing department are the basis for the finance's cash-flow forecast. Marketing budget is also dependent to the finance department;
Marketing vs. HRM: sales forecasts aid on workforce planning. HRM is also responsible for ensuring the recruitment and development for effective marketing activities to take place;
Marketing vs. Operations: market research is the basis for new product development and sales forecasts are used for capacity planning (staff, machinery, stocks, etc.).
Chapter 17 - The Nature of Marketing
To-Do-List: Essay Question #1.a.
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