The Importance of Marketing 

Markets and Marketing 

Market – set of arrangements that allows buyers and sellers to communicate and trade in goods and services. 

Marketing – identifying customers needs and satisfying them profitably. 

Goods and services are sold in a market. A market exists when buyers and sellers communicate and exchange goods for money. Historically, markets were places where buyers and sellers would meet to exchange goods. Today, it is possible to trade goods without buyers and sellers actually meeting up in person. For example, trading can be done over the telephone, using newspapers, through mail order or on the Internet. Some examples of markets are given below. 

• Consumer goods markets – where products such as food, cosmetics, furniture and magazines are sold.
• Markets for services – these are varied and could include services for individuals, such as banking, or business services, such as cleaning. 
• The housing market – where people buy and sell properties. 
• Commodity markets – where raw materials such as oil, copper, wheat and coffee are traded. 

Marketing involves a range of activities that help a business to sell its products. However, marketing is not just about selling, it involves: 

➔ Identifying the needs and wants of consumers 

➔ Designing products that meet these needs 

➔ Understanding the threat from competitors 

➔ Telling customers about products 

➔ Charging the right price 

➔ Persuading customers to buy products 

➔ Making products available in convenient locations. 

Vocabulary

• Marketing – can be defined as a management process involved in identifying, 

anticipating and satisfying customer requirements profitably. 

Building Customer Relationships 

Many businesses try to build relationships with their customers. This means that they try to establish a bond with them through effective communication and do everything possible to meet their needs. Businesses can adopt a number of practices to help build customer relationships. 

Increasingly, businesses are using social media to build customer relationships. Many are switching from the historic practice of broadcasting marketing messages to having conversations with customers. 

Keeping Customer Loyalty 

❖ Rewards Cards

❖ Free Gifts 

❖ Charitable Donations 

❖ Partnership Deals 

Product and Market Orientation 

• Product orientated – where a business focuses on the design and manufacture of the product itself rather than the needs of customers. 
• Market Oriented – where a business focuses on the needs of customers when developing products. This meant that businesses were more concerned about the quality of their products. Their efforts concentrated onthe design and manufacturing of the product itself. They then tried to persuade people to buy it. 

Some businesses today are still product orientated. For example, in the pharmaceuticals industry, companies such as Pfizer and Bayer focus most of their attention on the development of new drugs and medicines. They already know that a need exists. 

In contrast, most firms today are market orientated. They are led by the market and their focus is on the customer. They do not make products until they know what people want. Market-orientated firms spend a lot of their time and resources on identifying, reviewing and analysing the needs of customers. 

Market Share and Market Analysis 

• Market Share – Proportion of sales in a total market that a business or product enjoys. 
• Market Analysis – Quantitative and qualitative assessment of a market. 

A business might be more successful if it carries out market analysis. This involves finding out about the features or characteristics of a market. A business may gather both quantitative and qualitative information when assessing the market. For example, it will be useful if a business can find out: 

➔ The size of the market 

➔ The current growth rate in the market and the potential for future growth 

➔ The number and size of businesses currently operating in the market 

➔ The factors that might influence possible changes in the market – these 

➔ Tight include social, political, technological, environmental and economic factors 

➔ The possible costs and potential profitability in the market

➔ Opportunities for segmenting the market 

➔ The way consumers behave in the market, such as where they like to buy products and how they like to use them. 

Ideally, market analysis should be ongoing. Markets are dynamic, which means they are changing all the time. A business must keep in touch with market developments and respond to them appropriately. For example, in the market for motor cars, an increasing number of people are switching from petrol-fuelled cars to electric powered cars. This change is being driven partly by fears about global warming. 

Niche Marketing and Mass Marketing 

• Mass market – very large markets in which products with mass appeal are marketed 
• Niche market – smaller markert, usually within a large market or industry 

Some businesses sell their products to mass markets; this is when a business sells the same products to all consumers and markets them in the same way. Fast-moving consumer goods, such as crisps, breakfast cereals, confectionery and soft drinks, are sold in mass markets. The number of customers in these markets is huge. This might result in higher sales and higher profits. However, there is often a lot of competition in mass markets and therefore businesses may need to spend a lot of money marketing these products. 

A niche market is a small market segment – a segment that has sometimes not been serviced by larger businesses. Niche marketing is the complete opposite of mass marketing. It involves selling to a small customer group. 

Responding to Changes in the Market 

• Changing Customer needs 
• Changing Customer/Consumer Spending Patterns 
• Increased Competition 
• Competition puts Businesses under some Pressure