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IB Business Management - Complete Marketing Notes
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Business – November Exam Notes4.1 – The Role of Marketing
People have different needs and wants – needs are the essential necessities that all humans must
have to survive (e.g. food, shelter, warmth and water); wants are human desires, i.e. things that
people would like to have.
Irrespective of personal income or wealth, humans have infinite wants. Marketing exists to address
people’s needs and wants. It is about making customers want to buy the products of a particular
business. It therefore looks at the reasons behind people’s decisions, such as the price and the
product's features (e.g. colour, size, quality etc).
The marketing department of an organization tends to have 4 generic objectives:
1. ensure that the right products are supplied to fulfil the needs and wants of customers.
2. set the correct price so that customers can afford to buy the product.
3. distribute (or place) the products conveniently for customers to purchase.
4. ensure that there is adequate and effective promotion to convince customers.
A widely used and accepted definition of marketing is:
“the management process involved in identifying, anticipating and satisfying consumer
requirements profitably.”
marketing is a management process so it requires people to take responsibility for decision-
making – involves identifying the needs and wants of customers.
marketing involves anticipating or predicting what customers might want in the future –
which goods or services would they most likely feel inclined to purchase?
price, availability and quality are essential factors that customers consider when assessing
value for money – satisfied customers are more likely to become loyal customers.
marketing is about earning profit – price must therefore cover the costs.
Marketing is fundamental to the success of a business as it affects the sales and profits of the
organization. However, marketing alone does not ensure success.
operations management – the production department works closely with marketers in
using sales forecasts from market research to prepare their production schedules.
finance – the marketing department works closely with the finance department to set
appropriate budgets for business operations.
human resources – marketing data can help the HR department to identify staffing needs;
for example, the HR department’s role is to ensure that the business has the right quantity
and right quality of workers through effective workforce planning.
Marketing Goods and Services
There are similarities and differences in the marketing of goods and services. For example, both use
promotion to build brand recognition, brand awareness and trust.
The differences between the marketing of goods and services include the following characteristics:
intangibility – whilst goods are tangible (physical), services are intangible; marketers face a
challenge to communicate the benefits of the service.
, inseparability – services are consumed at the time of purchase; inseparability means it is not
possible to separate the production and consumption of a service, e.g. a bus ride.
heterogeneity – it is common to mass produce standardized (homogenous) goods such as
smartphones however services are heterogeneous because the experience is different for
different customers.
perishability – unlike goods, services cannot be stored; for example, each airline seat that is
empty means a loss in potential revenues to the business.
product strategy – many businesses provide value-added services to attract customers, e.g.
supermarkets offer a free delivery service.
price strategy – as people are a fundamental aspect of marketing services, the cost and
hence the price can be quite high; a challenge for marketers is to get the right pricing
strategy for a service that appeals to customers, ensuring that costs are covered.
promotional strategy – promoting a service can be a challenge for marketers as it is
intangible; businesses often use their physical environment to promote services.
place strategy – the location decision is vital for the business as customers tend to visit
convenient locations instead of remote locations.
Market and Product Orientation
Market orientation is a marketing approach used by businesses that are outward looking.
Businesses focus on making products that they can sell, rather than selling products that they can
make. Market orientation focuses on the customer in order to identify, design, develop and supply
products that meet their needs and wants.
market research and market analysis are central to a market orientation approach.
market orientation means that businesses do not worry about the costs of doing things for
the customer; instead they consider the costs of not doing these things.
The two main advantages to a business in being market orientated are:
1. greater flexibility – firms can respond quickly to changes in the market as they have access
to relevant data and information about customers.
2. lower risk - market orientated firms can be more confident that their products will sell and
be more successful.
The main disadvantage of market orientation is that market research (needed to found out what
customers want) can be very expensive. In addition, given the dynamic nature of the business
environment and the uncertainty of the future, there is no guarantee that this approach will work.
Whether a business adopts a product orientated or market orientated approach depends on several
factors, including:
the market
organizational culture
barriers to entry
Product orientation is a marketing approach adopted by businesses that are inward looking. They
focus on selling products that they make, rather than making products that they can sell.
The usual result is that product orientation is rather hit-and-miss, i.e. producers are not really sure if
the products will sell.
, Many product-oriented businesses today concentrate on producing high quality products. The belief
is that customers are willing to pay a higher price for exclusivity and luxury products. Product
orientated businesses generally supply products that they specialise in, such as Ferrari producing
sports cars.
the main advantages of product orientation are that quality can be assured and the firm has
more control over its operations.
however, since the needs of the market are ignored (because product orientated firms
assume what the market wants), there is a high failure rate of businesses that use this
marketing approach; hence, the strategy tends to be of high risk, especially due to frequent
changes in fashion and tastes.
Commercial Marketing and Social Marketing
Commercial marketing is the use of marketing strategies to meet the needs and wants of customers
in a profitable way. Unlike social marketing, commercial marketing is largely value free, i.e. ethics
playa small role, if any at all. Commercial marketing is about providing what customers want, when
they want it and where they want it.
Social marketing – “the planning and implementation of programs designed to bring about social
change using concepts from commercial marketing"
Social marketing is therefore the use of mainstream marketing methods to achieve the benefits of
social change, such as informing the public about the dangers of under-age drinking.
The clients of social marketing agencies tend to be non-profit organizations (such as charities) and
government organizations. However, companies that believe in corporate social responsibility (see
Unit 1.3) also use social marketing such as sponsoring events in the local community.
The main differences between social marketing and commercial marketing include:
purpose – commercial marketing aims at making profit whereas social marketing aims to
influence or persuade a desired social change.
benefits – commercial marketing exists to satisfy individual needs and wants, and thus reaps
profit for the business; social marketing, if successful, satisfies the needs and desires of the
general public, and thus reaps benefits for communities.
main users - commercial marketing is used mainly by private sector businesses; social
marketing is used mainly by the government and non-governmental organizations (NGOs).
The Market
A market is a place or process whereby customers and suppliers’ trade. A market exists where there
is demand for a particular product (such as textbooks, flowers, laptops or taxi services) and where
there is a willingness from businesses to supply these products.
consumer markets – markets that cater for private individuals
producer markets – markets that cater for organizations
Managers are interested in the characteristics of the market in which their business operates. These
characteristics include:
market size - markets differ in their size as measured by sales revenue.
customer base - refers to the total potential number of customers in a particular market.
barriers to entry - obstacles that determine the number of suppliers in the market.
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