Lesson 1: The role of marketing What is marketing? What is its purpose?

The role of marketing The purpose of marketing is to make customers aware of the products or services a business provides. It is the management process that is responsible for anticipating, identifying and satisfying customer needs profitably.

Anticipating and recognising demand How might a marketer anticipate the demand for the following products? Umbrellas Rowing lessons Sun tan lotion Tours to Egypt How would a marketer identify the demand for the following products? An organic pesticide A toy related to a blockbuster film A virtual reality game A safety device that alerts divers when they need to resurface Display the slide in preparation for this small group task, and issue learners with flip chart paper and pens. Tell learners to ensure they each contribute equally. Observe learners who are less vocal or under-confident. Nominate a team spokesperson to ensure everyone is involved and to assess listening and comprehension skills. Encourage deeper thinking among the learners about the types of events and sources that might help them to anticipate demand (e.g. Olympics, Commonwealth Games, long-range weather forecast, discovery of more artefacts of major importance, opening of another tomb). Recognising demand: demand for organic pesticide might be due to an invasion of ‘killer’ ladybirds because of unseasonable weather. Invite learners to add to the potential for recognising demand using topical and current examples.

Marketing aims and objectives The marketing department sets objectives to match what the whole organisation wants to achieve over the year. What aims might an organisation have? Marketing objectives often relate to: understanding customer wants and needs developing new products improving profitability increasing market share diversification increased brand awareness and loyalty How might these link to an organisation’s overall objectives? Understanding customer wants and needs: for products and services to be marketed effectively, businesses need to know what their customers want and need to fill any gaps in the market, or develop products further. This is done through market research. Developing new products: as a result of research, products are often developed to meet gaps that have been identified in the market. A marketing objective of an ice-cream business may be to develop a new flavour over the next year. This is risky as the business may only have limited knowledge of the market but may need to do this to build brand awareness in the market. Businesses with big brands find it far easier to bring out new products under the same brand so that the market already has an association with them. Improving profitability: the marketing department is crucial to increasing awareness of its products to its customers. If done successfully, this makes customers make purchases with the business. This will in turn increase sales, which should increase profits. In addition, the marketing department may be conducting research into how products can be made cheaper and therefore increase the profitability of each unit. Increasing market share: from the point of view of the marketing department, the market is full of potential customers for their products. However, it is also full of competitors. The more customers a business has, the larger its share of the market. Businesses with dominant market shares are often called market leaders. Market leaders tend to have more power over their competitors and can often set a benchmark for pricing that competitors follow. Diversification: taking a new product into a new market. This is risky and businesses have to conduct lots of careful research into the market and plan the launch. Due to the risks involved, it is normally bigger businesses that opt to diversify, as they can afford to take the associated risks. Increased brand awareness and loyalty: branding can be a symbol, logo, design or name. Over time, customers build up an understanding of what they think of a brand. The more good experiences they associate with the brand, the better their opinion of the brand will be. Once customers associate quality with a particular brand it makes it easier to charge higher prices for those products. By increasing brand awareness, a business makes that particular brand better known to the public.

Mass or niche markets? Mass market – products and services that will appeal to the whole market. Examples include: drinks mobile devices toiletries. Niche market – products and services that are intended for a specific group. Examples include: medical equipment specialist food software for accountants. Niche market Small firms often use niche marketing because they can concentrate on establishing a strong position in the market. Niche markets are usually too small to attract the interest of larger businesses. Mass market Many businesses start with niche market products but as they grow their aim becomes the mass market. The Body Shop is an example of this. When it started, it targeted a niche of people who wanted to buy ethical beauty products; due to its success early on, it grew to target a mass market.

Mass or niche? Give examples of businesses that provide niche and mass products or services relating to each of the examples below. Item of clothing Holiday Method of transport Technological Reinforce to learners that they will need to find an item of clothing for both mass and niche markets: for example, specialist shoes (niche) and socks (mass). For the holiday services, one niche example is a business offering walking holidays for blind people, with the services of a trained guide. If learners require some guidance on how to organise themselves in their groups, you could suggest they divide a group of four into two pairs, one of which explores mass and the other niche, and then the pairs share with each other. For a further challenge, each pair could swap its findings and give the other pair’s feedback to the whole class. This demonstrates their listening and comprehension skills as well as their ability to explain and articulate to each other. Reconvene learners into the teams to share with the class, encouraging all learners to be involved so that you can assess their English and communication skills. An extended activity could include figures that demonstrate how successful these companies are with their business model.

Brand personality and image Brand personality is a set of characteristics that we associate with a product or service. For example, we might describe Burberry fashion as ‘luxury’. With this in mind, what characteristics could you use to describe Apple, Mercedes, Nandos and Lidl? Brand image is the impression we have of a product or service. A strong brand image is one we instantly recognise. How many brand images have you seen today? If you want to make this more challenging, remove the examples given and task learners with only finding services.

Implications of business size How a business markets itself will depend on its size. Think about how the following companies might market themselves: a family-owned grocery shop a small, local travel agency. Now compare these with: Aldi Thomas Cook. Prepare to explain these differences. This activity involves learners undertaking research, and they will probably need to exercise some artistic licence, especially for the small business operations. They might not know what ‘artistic licence’ means so this will require explaining while you encourage them to be creative. Alert learners, if needed, that marketing activities require flexibility and creativity, and they should model these characteristics in their presentations. Encourage learners to record presentations and posters made and used in class (subject to obtaining necessary permissions from individuals). Reinforce to learners the meaning of ‘implications’ (used in the heading) and the need to find both benefits and disadvantages for both types of business. Suggest to those working at higher levels that they may wish to present arguments in favour of small businesses by thinking more laterally.

Internal influences on marketing activity Businesses have to make decisions on things like whether to bring out new products, lower the prices of their products, offer to sell online or promote more. Their ability to do these things depends on certain factors from within the business, such as: How much is it going to cost? Has the business got the money to do it? Do the staff have the expertise to be able to do it? Is the size and the culture of the business able to support it?

Internal influences on marketing activity John wants to launch a new service his cleaning company has developed. All staff except his office manager are involved in delivering the service. His budget is small but his manager has a degree in media and his uncle works for the local radio station. What are the internal influencing factors for this business? What are the implications and opportunities for marketing? Invite learners to make a choice about which question they will investigate. Those learners who progress more quickly can answer both. Advise learners that they are to present their findings in a creative manner that involves every member of the group, identifying their contribution. Reinforce that all sources must be suitably referenced.

External influences on marketing activity Several factors that are external to the business also need to be considered when deciding what marketing activity to undertake: Political factors such as government cuts/spending Economic factors such as a rise in VAT Social factors such as demographics Technological factors such as social media use Environmental factors such as a 5p charge for plastic bags Legal factors such as Consumer Protection (Distance selling) regulations. In small groups, try to come up with at least one example of a business that has been influenced by each of the above in relation to its marketing activities. Please use the worksheet provided. Political: A cut in government spending to schools has meant school budgets are cut. This could have a big impact on a business that sells its goods/services to schools. Lots of primary schools nowadays outsource the teaching of PE and employ specialist companies to teach their sports lessons. If primary school budgets are cut, they may not be able to afford this specialist teaching and this would then affect the specialist sport company as they would not be making as many sales. This would mean they would have to increase their marketing to other businesses such as private nurseries or develop different services. Economic: If VAT was to rise, this would make prices of most goods more expensive. This would be likely to affect the amount of goods that people can buy. This affects the marketing activities of businesses as they may decide not to bring out new products as people are spending less, or decide to change the prices of their products to increase sales. Social: The characteristics of the human population are called demographics. Knowledge of these helps marketing departments to know what products to offer. For example, the increase in migrant populations in the UK has meant that supermarkets are continually looking to offer an increased range of foodstuffs from different countries to meet this demand. Technological: Changes in technology present opportunities and threats to a business. They can impact the manufacturing of products, meaning higher economies of scale or higher-quality goods. 3D printing, for example, has meant that some products have become cheaper and produced quicker to meet demand. Technology has also changed the way that businesses promote their goods, with the use of social media. Environmental: Environmental factors can lead to changes in social trends and opinions and to new legislation being passed, for example the 5p plastic bag tax. This has, for example, had an effect on the way businesses package their goods. Some businesses have opted to offer customers free-of-charge paper bags, while others have not. Legal: Businesses are often constrained by laws and regulations governing how they market their products, for example by the ASA (Advertising Standards Authority) or the Data Protection Act, which impacts how they conduct market research. Note: Ethical is covered on the following slide.

Market Research What is market research? How can businesses use it to aid their marketing? Political: A cut in government spending to schools has meant school budgets are cut. This could have a big impact on a business that sells its goods/services to schools. Lots of primary schools nowadays outsource the teaching of PE and employ specialist companies to teach their sports lessons. If primary school budgets are cut, they may not be able to afford this specialist teaching and this would then affect the specialist sport company as they would not be making as many sales. This would mean they would have to increase their marketing to other businesses such as private nurseries or develop different services. Economic: If VAT was to rise, this would make prices of most goods more expensive. This would be likely to affect the amount of goods that people can buy. This affects the marketing activities of businesses as they may decide not to bring out new products as people are spending less, or decide to change the prices of their products to increase sales. Social: The characteristics of the human population are called demographics. Knowledge of these helps marketing departments to know what products to offer. For example, the increase in migrant populations in the UK has meant that supermarkets are continually looking to offer an increased range of foodstuffs from different countries to meet this demand. Technological: Changes in technology present opportunities and threats to a business. They can impact the manufacturing of products, meaning higher economies of scale or higher-quality goods. 3D printing, for example, has meant that some products have become cheaper and produced quicker to meet demand. Technology has also changed the way that businesses promote their goods, with the use of social media. Environmental: Environmental factors can lead to changes in social trends and opinions and to new legislation being passed, for example the 5p plastic bag tax. This has, for example, had an effect on the way businesses package their goods. Some businesses have opted to offer customers free-of-charge paper bags, while others have not. Legal: Businesses are often constrained by laws and regulations governing how they market their products, for example by the ASA (Advertising Standards Authority) or the Data Protection Act, which impacts how they conduct market research. Note: Ethical is covered on the following slide.

Research tools Primary research: new data gathered by the organisation itself. Examples include: surveys interviews sales figures observation trials focus groups. Secondary research: existing data that comes from another source. Examples include: business data on customers sales records financial records published reports government statistics trade journals media sources. Surveys/interviews: Carried out with chosen individuals who are asked questions about their behaviour. Surveys can be done face to face, by post, by email or by telephone. Interviews – face to face or via the telephone. Sales figures: These are the sales figures within the business itself which are analysed to see which products/services are doing well so marketing decisions can be made. Observation: This is the watching of customer behaviour. There is no interaction between the researcher and customer and no questions are asked; therefore the researcher cannot understand why the customer is behaving in a certain way. Trials: This is the testing of a product over a period of time. For instance, if a company were bringing out a new TV they might want to test it out over time to ensure that customers are able to use it and that the product meets the specification. Respondents then give feedback to the company on the product. Focus groups: These are selected groups of people (usually between 8 and 10) who are used in an in-depth interview and discussion. This is to discover people’s opinions and attitudes about products, competitors, the business, advertising, etc. Business data on customers: This is the information on people that has been collected by someone else, other than the business; for example, to find out about their tastes and preferences, etc. Sales records: This is the sales records of competitors that businesses may use to see what is selling well (or not). Financial records: These are the records of all purchases and customers. This information can be valuable for market research as it can help build a picture of the type of customer it wants to attract. Published reports and government statistics: The ONS (Office for National Statistics) conducts research and produces government reports including market research in population growth, employment statistics, social trends, expenditure, economic trends and regional trends that can be used by businesses. Private research companies such as Mintel conduct bespoke research to provide companies with more specific research findings and publish reports on these findings. Trade journals: These provide information about the market and industry trends and developments, and new products and services. Media sources: The internet is probably the most popular media source and is used to find valuable sources of marketing information. It is important to check the source however!

Two types of data Quantitative data This type of data is about quantities: that is, information that can be measured and written down with numbers. Examples of quantitative data are: number of sales of a certain product within an industry how much the economy has grown as a percentage over a period of time. Qualitative data This data looks at qualities (information that cannot be measured). Examples of qualitative data include: why people buy certain products people’s opinions on brands people’s thoughts on advertising campaigns. Teacher could invite learners to find some quantitative and qualitative data and then discuss the appropriateness of organisations using both of these types of research.

Implications of research tools Examine each of the research tool examples shown on the earlier slide and answer the following questions. What is it and what type of data could it be used to gather? What is it used for, who with and how? How will the data be analysed? How impartial are the results likely to be? What would you avoid changing and why? What would you change, why and how? This activity is not meant to be overly prescriptive but to get learners thinking about the implications of using different types of methods for market research and the purpose for their selection. Encourage learners to take their time – they could use all their time examining just one product thoroughly. Check learners’ understanding of impartiality and ways they might be able to identify impartiality (refer back to activity sheet 6). Suggest to learners that, if they have time left over, they could examine each of the products again as new discoveries might be made. If any groups need to be stretched or challenged further, suggest they identify a research tool from online sources to share with the group.

Market research task You now need to create a piece of market research. You have been tasked by your company of finding out whether opening a new Tesco store next to Finchley Lido would be successful. You can design your research however you want. You do not need to conduct the research, however I would like to see a write-up along with your research explaining why it is designed like it is. This activity is not meant to be overly prescriptive but to get learners thinking about the implications of using different types of methods for market research and the purpose for their selection. Encourage learners to take their time – they could use all their time examining just one product thoroughly. Check learners’ understanding of impartiality and ways they might be able to identify impartiality (refer back to activity sheet 6). Suggest to learners that, if they have time left over, they could examine each of the products again as new discoveries might be made. If any groups need to be stretched or challenged further, suggest they identify a research tool from online sources to share with the group.