Marketing Issues and Concepts

Ch 7

Marketing
Marketing is a system of business activities designed to plan, price, promote and distribute demand
satisfying products to the target markets to achieve organizational objectives.
Marketing is the process of researching into and identifying the needs and wants of customers and
employing appropriate product, price, place and promotion strategies in order to satisfy these
need profitably.
Marketing Process
Identifying marketing objective
Efficiently carrying out market research to identify target customers and the market where
the firm decides to operate in.
Designing and developing the product.
Testing the customer reaction to product, price, packing & quality.
Setting appropriate price.
Deciding suitable promotion strategy and promotion budget.
Establishing effective distribution system.
Checking actual sale against the set target to detect and investigating deviations and if
necessary amending targets (i.e. if unachievable).
Note: Marketing process doesnt ends with the sale of the product but continues in the form of after sale
service
Market Orientation
Market oriented or (market led) firms focuses on the needs and wants of customers and employ
their production and marketing resources in order to satisfy them. The market oriented firms
carryout market research and market analysis to identify present and future demand. They put
customer to first priority. Market oriented firms are best suited in fast changing, versatile consumer
markets. During recent years market orientation has significantly increased. The Henry Ford was
the first industrialist to adopt market orientation, i.e. in the formation of Model T cars he took
various suggestions from customer e.g. regarding prices and his Model T car became one of the
mass market products. Most of the modern companies now days are also using market
orientation i.e. Sonys product Walkman is based on market orientation.
Advantages
The risk of the failure of newly developed product is reduced (but can not be eliminated)
due to the help of market research (i.e. as the firm can identify the needs and wants of
customers). Thus high development cost can be secured. This is mostly considered to be
one of the most convincing argument that why firm uses market orientation.
As the firm caters with the needs of customers, longer product life, higher profitability and
customer loyalty gained.
Continuous feed back is received from customer thus this allows firm to quickly respond to
customers demand before its competitor (i.e. competitive edge is gained).
Product Orientation
Product oriented (or product led) firms are those that invent and develop products with the believe
that they will find the customer to purchase them (i.e. product sold itself), thus they focus on
producing effectively high-quality products on the believe that customers will rank them according
to market fashion. Interaction with customer is carried out after the product is developed. For
product oriented firms it is important that there research and development department should be
strong as they are relying on innovations and quality. Examples of product led firms could be
pharmaceuticals and electrical appliances. However there is a decline in product led firm during
past few years because of the chances of product failure due to changing in customer demand, this
is due to high technology.

 Factors that influence whether the business should be Market Oriented or Product Oriented.
Nature of Product e.g. Biotechnology, Pharmaceutical industry where Product Oriented
approaches is best.
Company Policy Depends upon the objectives of the business.
Degree of competition The number of competitors in the same industry.
Asset-led Approach
It is a third way between market orientation and product orientation, a market research is carried
out but instead of responding to the demands of every consumer firm looks towards its own
resources/strengths (i.e. factors of production and skill level of staff) and in the light of it respond
to demands & take benefit of its resources/strength.
Marketing Objective
Marketing objectives are marketing targets for products or markets set by the business for future
time period. The marketing objective must have the following characteristics.
They should be consistent with the entities overall objective.
They should be decided by the senior
Marketing objectives should be realistic, achievable, motivating, measurable and clearly
communicated to all members in the organization.
Areas for setting Marketing Objectives
Increasing or maintaining the market share.
Increasing or maintaining the sales turnover.
Market development.
Market penetration.
Gaining competitive edge/advantage.
Developing range of products.
Importance of marketing objectives
Different Concepts
Market
People or organizations with wants to be satisfied and willingness to spend money.
Note: - Market is a place where buyers and sellers meet is also a definition of market, but in
marketing point of view, we will not use it.
Target Market
A group of customers (people or organizations) upon whom we make efforts to sale our product.
Market Development
The identification of a new market to sale an existing product to increase sales.
Market Penetration
Increasing sales in existing markets by reducing price of the product.
Market Segmentation
Dividing the total market into small units (subgroups) on the basis of similar consumer
characteristics.
Mass Marketing
When the business treats the total market as a single unit and supplies the same product, e.g. Coca
Cola.
Niche Marketing
Identifying a particular segment (subgroup) of total market which may be small, but ignored by
others.e.g. in trading diet ice cream.

Market Share
The proportion of the total sales of a product during a specific period in a specific market, of a
single firm.
Market share is the total contribution of a firm in a particular industry Sale. Market share can be
derived form the following formula:
Market share =
Sales of a firm
x 100
Total Industry sales
Market Growth
The rate at which total sales in the market increase. Market growth depends on economic growth
as the income of people/organizations will increase their spending power and so they will purchase
products to satisfy their needs.
Adding Value
This is the difference between the actual selling price and the cost of the raw material. This is not
the profit because Wages, Rent etc are yet to be deducted.