3.1 - Setting marketing objectives

3.1 - Setting marketing objectives

3.1 Setting marketing objectives AQA A-level Business Hodder & Stoughton Limited 2015 1 Learning outcomes What you need to know: The value of setting marketing objectives AQA A-level Business Hodder & Stoughton Limited 2015 2 Marketing

Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitability. Chartered Institute of Marketing (CIM) definition It is about more than just advertising Marketing involves a range of activities including: Market research Setting prices Designing and using promotion methods, including advertising Designing the product and packaging Deciding where to sell the goods/services Managing distribution channels Customer service and communicating with customers The method of selling the good/service AQA A-level Business Hodder & Stoughton Limited 2015 3 Purposes of marketing

As described in the definition, marketing has three main purposes: 1. Anticipating consumers wants This can be done through carrying out market research to discover what the customer wants and what might make them purchase the good/service. It can also be used to analyse the market the firm intends to enter, including market size, number of rivals, current trends, average prices charged, etc. to know how best to deal with them when designing their strategy. 2. Satisfying customers wants Once firms understand the market they can design a marketing strategy to attract customers and build a company brand and reputation. The business will use a range of variables known as the marketing mix (the Seven Ps) to do this. 3. Meeting the needs of the business Marketing should help ensure a firm achieves its aims and objectives, such as survival, sales growth, market share gains, profit maximisation, social responsibility and ethics, etc. AQA A-level Business Hodder & Stoughton Limited 2015 4 The value of setting marketing objectives

Businesses must set marketing objectives to determine what they must do in their marketing strategy to help achieve their overall company objectives. Marketing objectives: The specific goals/targets of the marketing department. They must be in line with the firms overall corporate objectives. Discuss potential examples of marketing objectives a firm may set. Increase sales volume and sales value Brand image and awareness Market and sales growth Increase market share Build brand loyalty AQA A-level Business Hodder & Stoughton Limited 2015 5

Market size: Sales volume and sales value Market size: The total volume of sales of a product or the value of the sales of a product Sales volume measures the number of items sold or produced for example, 2.26 million vehicles were sold in 2013. Sales value measures the financial worth of the items sold. for example, the average car price in 2013 was 27,219 meaning a value of 27,219 x 2.26 million = 61,514,940,000 Firms may set objectives to maximise their sales volume or value or may set targets simply to maintain what they have particularly in difficult times. Market size can increase by either convincing consumers to buy more goods/services or to pay more for the same amount. A large market size will attract many competitors so many firms will prefer to operate in smaller niche markets. (For example, Hornby operating in the model railway business rather than other larger mass appeal toy markets) AQA A-level Business Hodder & Stoughton Limited 2015 6

Market and sales growth Sales growth: The percentage change in sales (volume or value) over a period of time for a specific brand. Market growth: The percentage change in sales (volume or value) over a period of time for a whole market. Sales and market growth is a percentage change which is an essential calculation to know for A-level business. To work out a percentage change between two figures you must use the following calculation: Percentage change = new figure original figure x 100 original figure Therefore sales growth and market growth are calculated the same way: Market growth = new market size original market size x 100 original market size Sales growth = new sales original sales x 100 original sales AQA A-level Business Hodder &

Stoughton Limited 2015 7 Market and sales growth Firms will want to enter markets that are growing to maximise sales. However market growth will attract many rivals. Market growth can be difficult to achieve for one firm so they may set targets to move into new growing markets by targeting new consumers, developing new products or by completely diversifying (new products in new markets) For example, Microsoft and Lenovo moving into the mobile phone market in recent years AQA A-level Business Hodder & Stoughton Limited 2015 8 Factors influencing market growth

Economic growth - If a countrys economy is growing, employment, pay levels and therefore consumers disposable income will be higher resulting in better sales and market growth, particularly for luxuries such as holidays. The opposite will be true when an economy is in decline although some goods may see sales increase, especially those that focus on low prices such as Primark and supermarket own-brands. Type of product - Luxury products will grow in sales most when the economy is growing and suffer when people are more worried about their spending. Social changes Changes in the general publics behaviour will see market growth. Examples may include: Consumers spending more time at home combined with low supermarket drink prices resulting in a decline in pubs but a rise in pay-for-TV services such as Sky & Virgin An increase in working hours and working households has made consumers cash-rich but time-poor resulting in demand for convenience products like readymade meals and restaurants The popularity of healthy lifestyles resulting in growth of certain healthy food products and e-cigarettes.

9 Factors influencing market growth Demographic changes The changing make-up of the UK population may see certain types of product markets become more popular. For example the UK has an ageing and increasingly diverse population which has seen the growth in certain trends of products that were previously more niche cultural or agespecific items. Changes in taste and fashions - for example. trends on television such as cookery, or mobile phone popularity causing app sales growth Firms can influence what is popular and therefore market growth through their own marketing efforts. AQA A-level Business Hodder & Stoughton Limited 2015 10 Market share Market share: The percentage of the total sales of a product or service achieved by one business compared with the total sales in the market. Market share (%) =

sales of one brand x 100 total sales in the market It is a key measure of a companys success as it compares its sales with those of its rivals To increase market share a firm must perform better than its rivals to take some of their customers Firms often may set objectives to become the market leader by having the highest market share, or to maintain their existing market share or even to increase market share in a particular section of the market. For example, Tesco is currently market leader in the supermarket industry but has seen their market share fall from 30.3 per cent in 2013 AQA Hodderwith & Stoughton Limited competition. 2015 11 toA-level 28.9Business per cent

intense Brand loyalty Brand: The set of physical attributes of a product or service, together with the beliefs and expectations surrounding it - a unique combination which the name or logo of the product or service should evoke in the mind of the audience. (CIM definition) A brand is designed to differentiate a company from its rivals and it can be represented by names, logos, slogans, etc. Brand loyalty: A measure of the degree of attachment that a consumer has for a particular brand. Loyal customers are more likely to make repeat purchases and less likely to switch to rival brands. There is much debate and research in this area but generally it is considered much cheaper to retain existing customers than attract new ones, so brand loyalty is essential. Brand loyalty is important for firms because:

It will ensure customers return for repeat purchases Firms will need to spend less on promotions as consumers are already convinced about the brand Companies may be able to charge higher prices as it reduces a brands price elasticity (The amount demand changes as price changes). As consumers are more committed to the brand they may be willing to pay higher prices even if they change. This means they become less price sensitive. 12 Other marketing objectives Increase size For example, sales revenue, market share, sales volume Market positioning - Appealing to particular or new market segment Security/survival A common objective for new start-up firms, those in difficult financial positions and during a recession Successfully launch a new product or end unsuccessful products Increase product awareness Innovation and developing new products Differentiation Creating a unique selling point and making the brand stand out from rivals Add value to existing products Methods to ensure consumers are willing

to pay a high price for the product/service, such as high quality, strong brand image, excellent customer service, etc. Ethical and environmental AQA marketing objectives A-level Business Hodder & Stoughton Limited 2015 13

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