Market Share
Market share gives the business an indication of the share the business has of the sales in that market.
Firms that have a high market share tend to have good profits, and can benefit from being market leaders and having economies of scale. They have more pricing power and are less threatened by competition. A business can increase their market share through
- Promotion
- Product development, improvement and innovation
- Motivating and training their workforce
- Ensure they have property rights through patents and copyright
- These stop other firms using their innovations
- More efficient channels of distribution
Market concentration gives a value for the amount of competition in a market, using the concentration ratio. It looks at the sum of the market share of the biggest firms in the market. A high percentage would indicate low competition, because the market would be dominated by only a few firms.
An oligopoly is a business that dominates an industry, and accounts for the majority of the industry’s overall sales revenues.
However, there are many problems associated with these sorts of calculations, especially because any sales data used is already out of date, and does not give an accurate representation of the current market.
Definition and Nature of Marketing
Marketing is really complex, so there isn’t really a proper ‘definition’ for it. Additionally, marketing strategies can vary greatly depending on the type of firm, etc. Here are some example definitions [sourced from Paul Hoang’s textbook]
- A management process which requires people to take responsibility for decision-making
- Identifying the needs and wants of customers through market research, data analysis, etc
- Anticipating or predicting what customers might want in the future
- Satisfying the consumer with products to meet their needs and wants, representing value for money
- Making a profit for the business by covering the costs of production with the selling price
Alternatively:
Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably
Naturally, marketing in a business does not operate independently of the other functional aspects of a business
- Operations Management
- Finance
- Human Resource Management
Market and Product Orientation
Market orientation gets the right product – product orientation gets the product right
Product-Orientation
Such businesses are described as being inward-looking, since they focus on selling their products, instead of making product to suit the needs and wants of their consumers. This often applies to innovative products, especially technological ones, which enter the market unknown.
A good product can create its own market, since customers are enticed to buy creative and innovative products.
These businesses will focus on selling very high-quality products, especially exclusive and luxury ones.
A product-orientated business is also at risk of failure, since they do not really consider what the consumers want, ignoring their needs.
Market Orientation
Also called consumer orientation or outward looking marketing. These businesses focus on producing their products based on the needs of the consumer, which is found through market research. Most of their decisions about things like price are made based on this data.
The main point here is that the focus stays on the consumer. Businesses that ignore the consumer tend to lose competitiveness.
There are advantages to this approach, including greater flexibility in response to market changes and less risk of a failing product. However, their products tend to be quite expensive, and this approach does not always guarantee success. Their success is dependent upon the nature of the market, the culture of their organisation towards customers and any barriers to entry in the market.
Marketing Goods and Services
The quality of services offered to customers can vary greatly. Since there is no tangible product for the customer to take away after the purchase, the business needs to be able to demonstrate the superior quality of their service through effective marketing and product differentiation.
Due to the nature of services, there are addition factors in the marketing mix which form the 7 P’s.
People
This is who delivers the service. Employees will greatly affect the experience of each customer. They are not always consistent due to motivation and behaviour. The effectiveness of their work can be measured using:
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Appearance and Body Language, such as through uniforms or professional attire, or smiling, etc.
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Aptitudes and Attitudes, including how well the employee knows what they are selling, whether they are proactive and attentive to customers, etc.
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Feedback, taken from stakeholders to judge how well the service was received
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Efficiency, including how many mistakes were made, waiting time and promptness
Process
This is how the service is delivered. This includes payment methods – how convenient they are, waiting time – should be short to avoid irritated customers, customer services – how polite and attentive employees are to customers, and after-sales care – services like maintenance, guarantees, warranties or helpdesks. If these are all done well, then the customer should be very satisfied with the overall service.
Physical Evidence
This is the tangible aspect of the service, such as the surroundings or peripheral products. These enhance the overall experience for the customer. The main challenges that arise in this area are:
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Correcting Mistakes – this is often very difficult to do, and often the damage done to the business’ image is irreversible.
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Measuring Productivity – also very difficult due to the nature of the work, which in turn makes it harder to reward employees
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People Management – requires good leadership and a large workforce, and consistency can be difficult to achieve.
Marketing for Non-Profit Organisations
Since the businesses do not seek profit, their marketing will have another purpose. This usually involves raising awareness of their cause, so it would be more informative than persuasive. They intend to get the public to take action to support their vision or cause. This is called social marketing. Marketing can also help to boost their image.
These businesses will also employ catchphrases or slogans to help people remember the organisation and their objectives. On the flip side, an organisation may seek to lower demand for undesirable products through de-marketing.
However, these firms tend to be limited in the amount of resources they can put into marketing, so they may use public relations as a tool instead. This includes celebrity endorsements, press conferences and fund-raising events. With advances in technology, non-profit organisations are also making use of the internet for promoting their cause.
They will also try to increase their distribution channels, promoting their image to sustain long-term survival.
Marketing Plans
This is an outline of the marketing objectives and strategies of a firm. This is more effective than ad hoc methods. In order to do this, a marketing audit will usually be done beforehand, analysing their marketing mix, and assessing the effectiveness of their marketing methods.
The plan would include:
- Objectives that are specific, measurable, agreed, realistic and time constrained
- What market research will be undertaken to identify their target market
- The strengths and weaknesses of competitors
- Outline of their marketing mix
- Their marketing budget
- Any problems they are likely to encounter and how they plan to deal with them.
A PEST and SWOT analysis would also be done.
Prior planning increases the likelihood of the firm experiencing success with its marketing methods, however it is not guaranteed. Managers will be able to deal with problems better and the different areas of the organisation will be unified in their objectives.
The main problem lies with smaller businesses that do not have the time and money to dedicate to doing this. In addition, the plan may become outdated quickly or make the firm unreactive to changes.
