1.1.1 Marketing

Marketing

Here we are going to look at marketing strategy and effective marketing, and how not to market a business.

Key Definitions

Marketing:  The process of targeting the "right product" at the "right target market" using the right combination of price, product and place to get as many customers/as much profit as possible.

Marketing Objectives: A marketing goal or target set by an organisation in order to help give the organisation a "direction" and a purpose.

Marketing Strategy: The medium/long term plan the business has to achieving a marketing objective.

Marketing Mix: The 4 components any business should consider when marketing a product. This consists of what the product is, the price of the product, how the product will be promoted and where the market will be.

Market Segmentation: The way a market is divided up into groups based on customers' age, gender or income to find where the demographic is being overlooked. 

Short-Termism: When a business chooses to focus on the short term situation instead of planning ahead for the long term. 

Introduction

Marketing is about gaining an understanding of what product or service is needed in order to meet customer needs to a satisfactory level. How a business markets itself and its products is massively important, and the link between marketing and market share/market performance shows that the insight into customer needs is essential when it comes to a business and to marketing. Good marketing comes from a variety of mediums, including extensive market research or plain instinct. Marketing often changes over time, so in order to stay successful a business needs to be prepared to adapt with the changes and to keep updated with the market they operate in. 

Marketing Objectives 

This is a target or goal used by an organisation to give the business drive or direction by giving the business something to achieve. These steer the business in a direction so they are hugely important to the business - a business without marketing objectives is like driving a car without knowing where to go: you could end up anywhere in any degree of success by chance, and running a business by chance is not a good leadership strategy. If a business sets a marketing goal this allows the marketing to be more focused and direct to the target market, increasing the chance of success and reducing the amount of money wasted as they are spending less money on pointless advertising. 

Effective marketing objectives are quantifiable and measurable, and are also set within a reasonable time frame. Good marketing objectives are often those which focus on increasing sales or market share- a good example of a marketing objective would be "to increase market share from 9% to 12% within two years" or "to achieve a 9% increase in sales of KitKat by the end of the year".

Marketing objectives are used often in the non-profit sector by charities such as Oxfam and the Red Cross. Objectives used by these organisations often include to "raise brand awareness", to "raise brand loyalty", and to "improve corporate image".  These are often used to help those who are trying to help a little-known cause, to improve the cash flow of the charity to help get more funds for their cause, and to help the charity recover from a scandal. 

Marketing Strategy

This is the medium-to-long term plan a business puts in place in order to achieve their marketing objective. A good marketing strategy should have 'POISE':

Profitability - a balance between the need for profit (business) and the need for value (customer)

Offensive - leading the market, taking risk, forcing competitors to follow the example

Integrated - the approach must flow through the whole company, not just in management

Strategic - analyze the market and competitors in order to create a successful marketing strategy

Effectively Executed - the strategy is carried out effectively with strong and disciplined teamwork

A good example of this being shown is with the software publisher King, who developed the hit game Candy Crush. The game was launched in 2012, and by 2014 it had the highest daily usage of any mobile app in the world, also grossing approximately $900 000 a day. In Candy Crush King 

successfully integrated all elements of POISE. 

Effective Marketing 

The most effective marketing begins with the identification of a gap in the market and an opportunity for success with little-to-no competition. In many smaller businesses the owner will come into contact directly with their customers, allowing the owner to hear first hand what the customer wants and needs, and what needs to be improved. In larger businesses professional market research is conducted as managers in the head office do not know what the customers want. Once the customer wants have been identified the product will be designed to suit these needs, and the marketing process will begin. 

The Marketing Process:

1. Marketing objectives are identified and set

2. Market opportunity is identified with a market map

3. Market strategy is decided upon

4. Cohesive market mix is developed and used, involving decisions such as price setting and promotional strategy 

Why is Effective Marketing so Important?

Customers are often price-sensitive and very rational, meaning they will only tend to choose the fairly priced products that satisfy their needs as much as possible. This is critical when trying to gain customer loyalty in a highly competitive market, as if the customer isn't satisfied in one place they will easily be able to go to an alternative business and increase their customer loyalty. Businesses who have a low customer loyalty may lose their market share and therefore lose profit. 

Customer tastes and social trends are often changing as well, so effective marketing needs to be done in order to respond quickly and keep up with the changes. This is where the importance of market research and the marketing mapping comes in, as a good business will use these to analyse trends and gaps in the market, in order to see where gaps in the market are. Those that fail to follow and adapt to these changes will find themselves forced out of the market and, inevitably, out of business. 

The Characteristics of Effective Marketing

1. Identifying the Target Market

When a new market is created the businesses involved will often aim their products at those who can afford it and they can charge whatever they choose to because they are the market leaders, there are no competitors around for them to compete with. As competitors move in (often focusing on one particular segment in the market) it will often be needed for the original business to evaluate their market and to become more focused on the needs of a target market.

In this market research will become more focused and specific to the target market, and the advertising expenditure will decrease as less will be wasted on 'pointless advertising to the wrong market. 

2. Segmenting the Market 

As most markets are not made up of people who want the same thing businesses will need to market their products in a way that will appeal to different market segments. The most successful businesses in this field will offer a range of products, such as Coca Cola have done with their range of soft drinks including Diet Coke, Coke Zero, and Caffeine-Free Coke. Market segmenting can be visually represented on a market mapping diagram, and this can show where the gaps in the market are. 

3. Developing a Brand Image with the Marketing Mix

The Marketing Mix is often used to help firms create a coherent and attractive brand image appealing to the target market. The success of a marketing strategy depends on how well they achieve all 4 elements of the Marketing Mix (the price, product, promotion and place)- if the product is well-priced and well-promoted it will fail if the distribution of the product is poor. The brand image is important when it comes to marketing, as if the created brand image appeals to customers the product is more likely to be successful. 

It is essential to remember that all four elements of the Marketing Mix need to be co-ordinated for success. If not the target market will received mixed messages and mixed signals about the product which could create confusion and damage the reputation of the business, leading to a drop in sales and therefore a decrease in profit. 

Short-Termist Marketing (Ineffective Marketing)

There are 2 main short-termist strategies used by businesses who want to boost their short-term profits. These are risky as using them can damage the long-term profitability of the business, which impacts their cash flow and their performance. 

1. High Prices to Exploit Consumer Loyalty or Market Leadership

Businesses that operate in a market with little-to-no competition may choose to raise their prices in order to take advantage of their market positioning and boost their revenues and profits in the short term. Exploiting customers is not a good way for a business to operate on a market and is not an effective method of marketing. The high prices can also present an opportunity for competitors to join the market and gain customer loyalty by offering cheaper prices. 

2. Short-Run Sales-Driven Marketing

As some managers believe the only way to boost employee performance if targets set are linked to bonuses and performance-related pay this can create an over-reliance on the financial benefits, creating a ruthless and dishonest culture within the business that can affect a firm's marketing approach. This can develop unethical marketing practices and result in a wave of bad publicity and can push potential customers away, therefore reducing the demand for the business's products and reducing their sales, revenue and profit.