the Firm’s Share of the Market i.e. MARKET SHARE: This refers to how much of the overall sales in the whole market a certain business owns. This is usually used to measure success of the business over time. It helps to see how well the business is doing over competitors.
It is measured, as a percentage, as follows:
Market Share = . Sales Revenue of Firm . x 100
Total Sales Revenue in Market
MARKET CONCENTRATION (Concentration Ratio):
It looks at the degree of competition within a market.
This is done by calculation the Market Share of the largest firms in the market (like Apple and Microsoft in the Computer Industry).
This is given by the Concentration Ratio, if there is a 98% concentration ratio then this means that the two top companies (Apple and Microsoft) produce for 98% of the whole industry, so this will not be a very competitive industry because the small businesses only account for 2% of the whole industry.
Such big industry dominating businesses are called oligopolists.
DEFINITION AND NATURE OF MARKETING:
Probably the most widely used and accepted definition is provided by the Chartered Institution of Marketing which defines marketing as, “the management process involved in identifying, anticipating & satisfying consumer requirements profitably”.
The above definition is commonly used as it covers the nature the marketing:
Marketing is a management process.
Marketing involves identifying the needs and wants of customers.
Marketing involves anticipating or predicting what customers might want in the future.
Marketing seeks to satisfy the customers and consumers.
Marketing is about making a profit.
Marketing is fundamental to the success of a business as it will affect the sales and profit of the organization. However, marketing alone does not ensure success since other aspects (like Finance, Operational Management, Human Resource Management, etc) the business must also be considered.
MARKET ORIENTATION AND PRODUCT ORIENTATION:
MARKET ORIENTATION:
A business that focuses upon satisfying customer needs and wants, and produces what the customer wants rather then what they can actually make.
Usually involves market research to look into the present and future demand of the product, this is costly but it is worthwhile as it makes the product less risky and more likely to form good profits.
A market oriented business is also flexible to changes in the market, like different trends because they can be kept up to date.
A disadvantages for market orientation is the costs associated with it, there is not always a guarantee this method will be successful.
PRODUCT ORIENTATION:
This is used to describe a business that focuses production on the product in itself instead of producing to satisfy customer needs and wants.
The product is produced in the belief that it will be sold, and it may be for popular products like the iPod.
Sell products that they can make, rather than selling products with elevated costs due to marketing.
Product orientation may be successful be because of Say’s law (supply creates its own demand).
Producers are not always sure if they well sell, it is highly risky because suitable market research has not been undertaken, and money for R&D may be wasted as because of “hit and miss’ strategies.
Many product orientated businesses may focus upon producing more luxury items where the production process may be scrutinized with more detail, so quality can be assured.
FACTORS THAT AFFECT MARKET OR PRODUCT ORIENTATION:
What type of product it sells, if it is a product that is quite homogeneous than not a lot of market research will be required.
Organization culture, if a firm believes that customers should be placed above all then it will usually be market oriented.
Nature of barriers to entry; firms with less competition will be more product orientated and vice versa. This is because if there are many barriers of entry there will be fewer suppliers in the market, so consumers don’t have such a broad range of options.
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HIGHER LEVEL EXTENSION:
ADDITIONAL MARKETING ORIENTATION:
SOCIAL MARKETING:
Usually for a cause instead of selling of products.
Like the Government imposed adverts to prevent people from taking drugs and smoking, this is a form of social marketing.
An activity that affects social behavior.
This differs from commercial marketing because people are not persuaded to buy anything, but instead informed of caused and persuaded against a certain action.
A challenge to social marketing is the unwillingness of people who change their social behavior due to habits.
Clients of social marketing agencies are usually non-profit organization and this is how if differs from profit making organizations.
ASSET-LED MARKETING:
It is a strategy based on the core competencies (key strengths; which include human, physical or non-physical assets) of a business. It emphasizes the product or key strengths yet decisions based on the need of the market.
It enjoys the benefits of both physical and market orientation.
It is not only used in mass markets but it is often used to enter niche markets.
Its main advantage is that the firm can capitalized on its strengths to gain a competitive advantage.
Its main drawback is that firms will tend to overlook markets in which they do not hold any core competencies (i.e. it means that weaknesses may never be turned into strengths and potential market opportunities are ignored).
THE MARKETING (marketing-mix) OF GOODS AND SERVICES:
The marketing-mix of Goods consists of 4 P’s i.e. price, product, promotion and place; whereas the marketing-mix of Services consists of 7 P’s i.e. price, product, promotion, place, people, processes and physical environment (3 additional elements).
PEOPLE (employees):
The provision of services relies on the goodwill of all employees (for e.g. Schools requires teachers who are passionate about their subjects to deliver good education to students).
People (employees) are not consistent and countless factors affect the behavior and motivation of staff, which may change from one day to another.
The effectiveness of people in delivering a service may be measured in a number of ways, such as appearance & body language, aptitudes & attitudes, feedback, efficiency.
PROCESSES:
It refers to the way in which a service is provided or delivered (for e.g. Insurance brokers often have a challenging task in convincing clients to buy insurance policies as the process is quite complex).
It includes: payment methods, waiting time, customer services, after-sale care.
PHYSICAL EVIDENCE (OR PHYSICAL ENVIRONMENT):
It refer to the tangible aspects of a service (for e.g. in a 5-Star Hotel we might expect to see a clean lobby with nice décor, well-groomed hotel staff, restaurant and other facilities should also be pleasing to the eye).
Many business use peripheral products (i.e. additional products) in delivering their services (such as drinks or magazines offered to clients in a hair salon) which are used to enhance the overall experience for customers.
Conclusion: Managing the provision of Services can prove to be a challenging task in comparison to managing the marketing of physical Goods. Challenges facing managers in delivering quality customer services includes: Correcting mistakes, Measuring productivity and People management.
MARKETING IN NON-PROFIT ORGANISATION:
For many non-profit organizations, the marketing is not about selling a physical product but a mission, vision or cause.
Non-profit organizations tend to use social marketing strategies rather than the market-led strategies used by profit-seeking organizations; as the main aim of social marketing campaigns is not to make a profit at the end but for the public to take action, such as donating money to a specific charity or providing their support in recycling household products.
Philip Kotler, suggested that many charities (i.e. non-profit organizations) have moved away traditional ways of collecting funds, opting to employ some fairly sophisticated marketing techniques. Government agencies and departments such as Army and Police Force in many countries also use marketing to enhance their image and to help in hiring new recruits. Governments are also adopting social marketing techniques to encourage recycling and protecting of the environment.
Other marketing strategies / methods used by Non-Profit Organizations are: slogans, de-marketing, public relations, internet technologies, distribution channels.
ELEMENTS OF A MARKETING PLAN:
A Marketing Plan is a document outlining a firm’s marketing objectives and the marketing strategies to be used in order to achieve these objectives.
A Marketing Plan is usually preceded by a Marketing Audit; which can then help in producing next /future marketing plan.
A Marketing Plan is likely to include the following details:
SMART marketing objectives
Methods of market research to be used to identifying target markets.
Outline of the marketing-mix to employ.
Details of the marketing budget.
Outline of the likely problems that may be encountered and strategies to deal with them.
PEST and SWOT analyses.
The main advantages are:
it improves the chances of success
it help the managers to identify & deal with likely problems to be encountered
the various functional areas of a business will have a clear idea of the organization’s objectives and the constraints in which they are to operate.
it helps senior managers to have better control of the business
The main limitations are:
management will need to devote appropriate resources (like time, money & people) to marketing planning.
marketing plan can also become outdated quite quickly or instill inflexibility in the organization since they do not allow for sudden changes in market conditions
it is not suitable especially in high-tech and fast-paced industries.
CONCLUSION: (THE ROLE OF MARKETING AND BUSINESS STRATEGY):
Marketing is about understanding the market(s) in which a business operates in order to develop strategies to influence the action of others.
Different businesses approach marketing in different ways. For e.g. businesses that take a market-led approach to their marketing put the customer at the top of their priority; called consumer sovereignty.
Research has shown that most businesses adopt market orientation, especially since customers are increasingly more knowledgeable and have greater access to alternative suppliers.
For many services, the location of businesses is of vital importance to the customer. However, the emergence of e-commerce has meant that the location for some service providers, such as banks and schools, is no longer such a difficult one.
Prof. Kotler argues that almost any business can use informal and low-cost alternatives to market research; especially with the developments in internet technologies.
The growing number of non-profit organizations in society can therefore provide many opportunities and challenges to marketing agencies.
Businesses often fail due to a lack of proper Marketing Planning. Marketing Planning gives a sense of direction to the business and problems so that they can be avoided or dealt with beforehand.
In their book Uncommon Practice A. Milligan and S. Smith (2002) argue that the fastest way to build a name in business to command attention to a firm’s products or services. In essence, this is the role and challenge of marketing.
by
vidit96 (student)
