3.3 Marketing Decisions
Marketing identifies consumers’ needs and wants: Marketing objectives are the marketing
departments Aims
§ Anticipate their future needs- one step ahead
§ Tries to ensure that the business supplies goods and services DEFINITION: A specific goal or target relating to
that customer want in order to make a profit- mutually the marketing activities and performance of a
beneficial business
§ Marketing ensures loyalty.
§ They help achieves the company’s overall
objectives and should be SMART
Marketing objectives:
Sales volume (quantity, easy to understand and make comparisons with) and sales value (price, easy to understand and
make comparisons with, more useful than volume when comparing with multiproduct firms, more comprehensive
measure
§ Reach a certain sales volume e.g. sell 2 million sewing machines. Sales volume is easy to visualise- doesn’t tell you
anything about the amount of money coming in from sales. Businesses that sell a lot of differently prices items
usually base obj on sales value instead e.g. achieve £500 million in sales over a year
Marketing obj are usually quantitative, can also be qualitative. For instance improving product quality, making sure a
particular product survives when rival enters- creating and maintain brand loyalty
§ Brand loyalty
§ Market positioning- which segment you appeal to
§ Innovation
§ Security + survival
§ Ethical + environmental objectives
Sales growth:
§ Growth in sales of a certain volume of value over a year e.g. sell 50,000 more sewing machines, increase sales revenue
by £50,000. Alternatively, they may aim for a certain % growth in sales
Market share: the percentage of sales in a market made by one firm or brand. Increase market share- tells a business
how well it’s doing compared to its competitors. Increase market share - entice customers away from competitors, or
attract brand new customers in a growing market
Market size and market growth: total number of sales in the market over a period of time. If the market size increases
from one period to another then the market is growing. Set obj to stimulate market growth- as long as market share
stays the same or grows, they’ll see an increase in sales
,Internal influences on marketing objectives:
Corporate objectives- most important internal influence. Must be aligned with the company’s overall goals. E.g. if the
business wants to increase profits in the short term no point in the mark dept focusing on a new product that’s still 2 years
away from being launched
Finance- finance dept. allocates the marketing depts. budget. Budget is cut- mark obj need to be scaled down. Financial
position of the business (profitability, cash flow, liquidity) directly affects the scope and scale of marketing activities
Human resources- HR planning, decides staffing. Marketing will adjust its objectives to match what is achievable with
these staff levels. If there are fewer operations staff, the capacity will decrease so there’ll be a limit to how much
marketing can increase sales volume. Motivated and well trained workforce can deliver market leading customer service
and productivity to create a competitive marketing advantage
Operational issues- has a key role to play in enabling the business to compete on cost (efficiency/ productivity) and
quality. Effective capacity management also plays a part in determining whether a business can achieve its revenue obj
Organisational culture- a marketing orientated culture is constantly looking for ways to meet customer’s needs. A
production orientated culture may result in management setting unrealistic or irrelevant marketing objectives
External influences:
Market conditions- state of the economy. An economic boom – increase sales volume as income levels are higher.
Recession- marketing department is more likely to set an objective of maintaining market share. Exchange rates impact
international marketing
Competitors- if a competitor is focused on low prices- marketing dept. may alter obj to be more price comp. e.g. Microsoft
dropped the price of the Xbox one soon after it launched to compete on price with cheaper ps4
Technology- markets where tech changes rapidly, mark obj focused on sales and price, new tech causes prices to rise of
fall very fast. Regular TVs price fallen since smart TVs. But reg TVs have high market share- cheap. Marketing dept of a
regular tv manufacturer will reassess sales objectives and pricing strategies ensure they’re left with unsold stocks
Ethics and environmental factors- ethical and environmental awareness is increasing amongst consumers- behaving
unethically damages brand image. People disapprove of unnecessary amount of packaging. A business may change their
marketing obj to include communicating how ethically and environmentally conscious they are.
,Value of setting marketing objectives
§ Ensure functional activities consistent with corporate objectives
§ Provide a focus for marketing decision-making and effort, helping to identify marketing priorities and allocate
resources
§ Provide incentives for marketing team and a measure of success / failure
§ Establish priorities for marketing resources and effort
§ Marketing strategy and activities are aligned with corporate objectives
§ A way of measuring marketing activity performance
Problems with marketing objectives:
Fast- changing external environment
§ e.g. changes in legislation impacting the whole market
§ new competitors enter the market
Potential conflict between marketing objectives
§ e.g. trying to increase market share by cutting prices may damage objectives for brand perception
Easy to be too ambitious marketing objectives
§ e.g. growing market share without putting necessary resources in place to achieve it
,Market analysis Different ways a market can be classified:
,Market Mapping:
Compares two features of products or brands
Businesses can get lots of information from analysing market maps:
§ Market maps help a business spot a gap in the market. Can try to fill it with a new product or brand knowing
there aren’t any close competitors. Other market research is needed to see if there’s actually demand
§ They show who its closest competitors are – help plan the best marketing strategy to persuade customers away
from them
§ If sales are declining, market map- sees how customers view their product and try to reposition it on the map.
§ Show the features provided by the most popular brands- indicate benefits considered most desirable by the
target market
§ Show how much customers expect to pay- help with pricing strategy
However
§ Can simplify things too much
§ The positions of products and brands on a market map is usually a matter of opinion and may be biased.
Different people may have different views on whether a product is high or low quality
,Market research
This is the collection and analysis of market information such as customer likes and dislikes
§ Helps spot opportunities- business research customer buying patterns to aid them in predicting what people will
be buying
§ Helps them decide what to do next- before launching a product or advertising cam
§ Helps see if plans are working
§ But it is expensive and bad market research can lead to disastrous business decisions
Primary research: research you conduct yourself
§ Data gathered with questionnaires, interviews, post, phone, focus groups
§ Businesses do test marketing – launch a product in one region and measure sales and customer response before
launching elsewhere
§ Uses sampling to make predictions about the whole market
§ Primary data is needed to find out what consumers think of a new product – can’t use secondary as there won’t be
secondary for a brand-new product
§ Primary is specific- great for niche markets. Secondary may be broad or too mainstream
§ Data is exclusive to the business who researched it, competitors can’t benefit
§ Labour intensive, expensive and slow
Secondary research using already existing data.
§ Internal sources- info from loyalty cards, feedback from comp salesmen, analysis of reports, financial accs and stock
records
§ External sources- gov publications, mark agency reports, pressure groups, trade magazines
§ Much easier, faster and cheaper to get hold of
§ Secondary data gathered for diff purpose – unsuitable, contain errors, out of date
§ Often used to get an initial understanding of a market. Business may then do more specific primary research to
investigate issues of problems that are shown up.
Quantitative data: Qualitative data:
Produces numerical data statistics- figures, Researches into the feelings of customers. Uses focus groups, open
facts. Often using multiple choice questions- ended questions
closed questions, fixed, predetermined
Benefits:
answers. E.g. survey., telephone, postal,
online § Essential for important new product development and launches
§ Build a rapport – get better answers
Benefits:
§ Focused on understanding customer needs, wants, expectations =
§ Data is relatively easy to analyse very useful insights for a business- get them into public domain.
§ Numerical data provides insights into Opinions shape the project
relevant trends § Can highlight issues that need addressing – e.g. Why customers
§ Can be compared with data from other don’t buy
sources (e.g. Competitors, history) § Effective way of testing elements of the marketing mix- new
branding, promotional campaigns
Drawbacks:
Drawbacks:
§ Focuses on data, doesn’t explain the
reasons behind numerical trend § Expensive to collect and analyse- requires specialist research
§ May lack reliability if sample size and skills
method is not valid § Based around opinions- risk that sample is not representative
,Market researchers need a representative sample:
§ MR surveys samples of people rather than the whole market- keeps costs down, saves them time and resources
§ Sample should try to represent the market- must have similar proportions of people, like age, income, class.
Sample in unrepresentative- problem
§ A big sample has a better chance of being representative than a small sample- but always margin of error
§ The size of sample depends on what a company can afford to ask. Cash available for research is limited, risk of
information being inaccurate increase
§ The size of the sample and sampling method is affected by the type of product or business, risk involved, target
market
§ Market research needs to avoid bias
§ Predictive reasons- forecasting
§ Explanatory reasons- why things have happened, factors influencing demand
Sampling- a representation of the market Interpretation of data
Benefits of sampling: § Confidence intervals- accuracy of data
§ Extrapolation – using previous data to explain
§ Good indication of likely behaviour
why things have happened
§ Flexible § correlation
§ Learn about markets quickly
§ Good face to face service
Sales forecasts help other departments:
Drawbacks:
Allow the finance dept to produce cash flow forecasts-
§ Sampling errors- questions lead to certain answers
can use predicted sales to work out how much money is
§ Bias in sample
expected to come in and spend
§ Small sample size- inaccurate, unrepresentative
§ Profile sample – out of date- changing trends Allow production and HR depts to prep for the expected
level of sales. Ensure they have right level of machinery,
stock and staff
, Strengths of extrapolation:
§ Common for past trends to continue
§ Most useful in fairly stable environments where the size of the market of the numb of comp is unlikely to change
§ Businesses hit target market
§ Help meet expected demand
Weaknesses:
§ Trends don’t always continue. Relies on past trends remaining true. Extrapolations from past don’t always predict
accurately
§ Seasonal and cyclical demand
§ Ignores qualitative data
§ Sudden unexpected events are a pitfall for this. Changes in the market due to new tech make extrap from past data
useless
Confidence intervals are a margin of error for sample results
§ Confidence levels indicate how sure you are that the value for the population lies within the confidence interval
§ You choose the confidence level then calculate the confidence interval for this level
To be more confident- increase confidence level- gives a wider confidence interval. However a wide confidence interval
can be too vague to be helpful
They show uncertainty in predicting other figures
Correlation shows how closely two variables are related e.g. age of customers and income
§ Useful tool but doesn’t prove cause and effect.
§ External factors have to be taken account when reviewing correlation
