Marketing management

Welcome to Marketing Management!

Hi there! Welcome to your study notes for Marketing Management. Marketing is often the heart of a business. It’s not just about flashy adverts; it’s about finding out what customers want and making sure the business provides it at a profit. Whether you want to run your own shop one day or work for a global brand like Nike, understanding these concepts is key. Don’t worry if some of the data parts seem tricky at first—we will break them down step-by-step!

1. Understanding Customer Needs

Before a business can sell anything, it needs to understand its customers. This is where Market Research comes in.

Primary vs. Secondary Research

• Primary Research (Field Research): Gathering "new" data that doesn't exist yet. Example: Handing out surveys in a shopping centre or running a focus group.
• Secondary Research (Desk Research): Using data that already exists. Example: Looking at government census reports or a competitor’s website.

Qualitative vs. Quantitative Data

• Quantitative Data: Think "Quantity." This is about numbers and facts. Example: "70% of people prefer blue packaging."
• Qualitative Data: Think "Quality." This is about opinions, feelings, and "why" people behave the way they do. Example: "Customers feel that blue packaging looks more professional."

Market Mapping

A Market Map is a simple grid (usually with two axes like Price and Quality) used to identify gaps in the market. It helps a business see where their competitors are "positioned" and where there might be an opportunity to launch a new product.

Quick Review: Market Research

Purpose: To reduce risk and help make better decisions.
Memory Aid: Primary = "First-hand" (you did it). Secondary = "Second-hand" (someone else did it).

2. Markets and Marketing Data

Not all markets are the same. A business needs to know who they are selling to:

• B2C (Business to Consumer): Selling directly to the public (e.g., buying a coat from Zara).
• B2B (Business to Business): Selling to other businesses (e.g., a paper company selling to an office).
• C2C (Consumer to Consumer): Individuals selling to each other (e.g., selling a used phone on eBay).

Analysing the Numbers

You will need to calculate and interpret some key figures. Here are the most important formulas:

Market Share: This tells you how much of the total "pie" one business owns.
\( \text{Market Share} = \frac{\text{Sales of one business}}{\text{Total sales in the market}} \times 100 \)

Market Growth: This shows if the total market is getting bigger.
\( \text{Market Growth} = \frac{\text{New Market Size} - \text{Old Market Size}}{\text{Old Market Size}} \times 100 \)

Return on Marketing Spend: Did the money spent on an advert actually pay off?
\( \text{Return} = \frac{\text{Net profit generated by marketing}}{\text{Cost of marketing}} \times 100 \)

Did you know? A business can have falling sales but still have a rising market share if the total market is shrinking even faster than they are!

3. Demand and Elasticity

Demand is how much of a product people are willing and able to buy. It is influenced by price, income, tastes, and the price of "substitutes" (competitors).

Price Elasticity of Demand (PED)

PED measures how much demand changes when you change the price.
\( \text{PED} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}} \)

• Price Inelastic (Result between 0 and -1): People are not very sensitive to price changes. If you raise the price, they still buy it (e.g., petrol, milk, addictive goods). Revenue usually goes UP if you raise the price.
• Price Elastic (Result less than -1): People are very sensitive. If you raise the price, they go elsewhere (e.g., a specific brand of chocolate). Revenue usually goes DOWN if you raise the price.

Income Elasticity of Demand (YED)

YED measures how demand changes when people’s incomes go up or down.
\( \text{YED} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in income}} \)

• Normal Goods (Positive YED): As people get richer, they buy more (e.g., restaurant meals).
• Inferior Goods (Negative YED): As people get richer, they buy less and switch to better items (e.g., "value range" bread or bus travel).

4. Segmentation and Targeting

A business can't usually sell to everyone. They use Market Segmentation to divide the market into groups with similar characteristics:

• Demographic: Age, gender, income.
• Geographic: Where they live.
• Psychographic: Lifestyle, hobbies, personality.
• Behavioural: How often they use the product or brand loyalty.

Niche vs. Mass Markets

• Mass Market: Selling to a huge, broad audience (e.g., Coca-Cola). Pros: Huge potential sales. Cons: High competition.
• Niche Market: Selling to a small, specialized segment (e.g., handmade vegan dog treats). Pros: Can charge higher prices. Cons: Small number of customers.

5. The Marketing Mix (The 4 Ps)

The Marketing Mix is the set of tools a business uses to achieve its objectives.

Product

Businesses use the Product Life Cycle to track a product from "Development" to "Decline." When a product starts to fail, they use Extension Strategies (like rebranding or new features) to keep it alive.

The Boston Matrix: A way to look at a "portfolio" of products:
1. Stars: High growth, high market share.
2. Cash Cows: Low growth, high market share (profitable and stable).
3. Question Marks: High growth, low market share (risky).
4. Dogs: Low growth, low market share (might need to be dropped).

Price

• Price Skimming: Starting with a high price for a new, exciting product (e.g., the latest iPhone).
• Penetration Pricing: Starting with a very low price to grab market share quickly.
• Dynamic Pricing: Prices change based on demand (e.g., Uber or airline tickets).

Place (Distribution)

This is how the product gets to the customer. It could be Direct (Farmer selling at a market) or use Intermediaries like Wholesalers and Retailers (Tesco buying from a farm to sell to you).

Promotion

The Promotional Mix includes advertising, branding, sales promotions (BOGOF), and sponsorship. Branding is vital because it builds customer loyalty and allows a business to charge a higher price.

6. Digital Technology and Marketing

Modern marketing relies heavily on technology. Businesses use Data Analytics to predict what you want to buy before you even know it!

• SEO (Search Engine Optimisation): Making sure a website appears at the top of Google.
• PPC (Pay Per Click): Adverts that appear on search engines where the business pays every time someone clicks.
• CRM (Customer Relationship Management): Systems that track every interaction with a customer to keep them coming back.
• Social Media & Influencers: Using platforms like TikTok or Instagram to build brand awareness through "personal" connections.

Key Takeaway: Digital Success

Businesses measure digital success using Conversion Rates (what % of visitors actually bought something) and Click-through Rates.

7. Marketing Objectives and Planning

Marketing doesn't happen in a vacuum. It must work with other departments like Finance and Operations.

Common Marketing Objectives:
- Sales Volume/Value: Selling more items or making more total money.
- Brand Awareness: Making sure people know who you are.
- Customer Retention: Keeping existing customers happy so they don't leave.

Common Mistake to Avoid: Don't confuse Sales Volume (the number of items sold) with Sales Value (the total money received). If you lower your price, your volume might go up, but your value might stay the same or even go down!

Top Tip for the Exam: When you are asked about a marketing decision, always think about the Marketing Budget. A business might have a great idea for a TV advert, but if they don't have the budget, it isn't a realistic strategy!