Marketing Principles

Session 1 – Role and Function of Marketing

Learning Outcomes

At the end of this session students should be able to:

•Define marketing as an exchange process•Explain the role of marketing in achieving customer satisfaction•Explore the importance of marketing as a cross-functional activity within the organisation•Analyse the role of marketing for internal and external marketing

Syllabus references: 1.1, 1.2, 1.3, 1.4

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Definition 1

The CIM defines marketing as:

‘The management process which identifies, anticipates and supplies customer requirements efficiently and profitably’

Chartered Institute of Marketing, www.cim.co.uk, 2008

Definition 1• Let’s look at the CIM definition in more detail:

—The management process . . . —Marketing should be considered at Board level and the marketing

strategy should be integral to the firm’s business plan.

—This is because the firm is nothing without its customers.

— . . . which identifies, anticipates and . . . —The firm uses market research and environmental scanning to

identify and anticipate customer needs, and then puts together a marketing plan, in the form of a marketing mix so that it:

— . . . supplies customer requirements efficiently and profitably

—The firm must delight the customer at all times but it must also do so profitably, so it must select products / services and customer groups that will allow this to happen.

Definition 2

“Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange and satisfy individual and organisational objectives”.

(American Marketing Assciation, 2004))

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What is marketing?

• Marketing is a business philosophy• It is a way of doing things that puts the customer

at the heart of the organisation• It is not just about having a marketing

department, but about the whole company being dedicated to serving and delighting the customer

• Firms that put their customers at the heart of their organisation are marketing-oriented

Marketing is an exchange process

• Customers provide payment to an organisation in exchange for goods or services. This is an exchange process.

• A customer makes a sacrifice when they part with some money, so the product or service they receive in return has to outweigh the sacrifice.

• The organisation has to value what it gets in return for the goods or services it has provided (it has to receive a fair price for its effort).

• In modern, market-based economies, customers can choose from a range of potential partners

Marketing is an exchange process

• It is much easier for organisations to sell to existing customers than to new ones.

• So marketers aim to repeat the exchange process over and over again to achieve customer retention.

Customer retention

It is cheaper to keep customers than to gain new customers. Existing customers:

• Are easier to deal with• Take up less time• Spend more money with the business in the longer

term• Tell other people how good you are• Lead to satisfied and more motivated staff.• Are less likely to take their business elsewhere

Marketing throughout the organisation

‘Marketing is so basic that it cannot be considered to be a separate function. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view.’

Drucker, quoted in Palmer, 2004

How marketing links to other functions

• If your organisation is marketing oriented, it can’t confine the responsibilities of marketing to just one department.

• This is because the activities of all departments and people within the firm ultimately affect the value that the customer receives.

• Marketing and the following functions are all inter-dependent:– Research and development

– Human resources

– Production / operations / logistics

– IT

• Each of these departments must work with marketing to make sure that the ultimate product or service that the customer receives satisfies their needs and expectations.

Marketing works across the organisation

• Marketing relies on other people within the organisation to help it implement its plans.

• For instance:— If the marketing team identified that there is a market for

traditional wooden spinning tops painted in bright colours, it would need to work with the purchasing and manufacturing teams to make the tops, with research and development to find paints that are suitable for children’s toys, and with the IT team to add the product to the website and to make sure that the search engines could find it. In addition, it would need to ensure that the sales team was aware of the features and benefits of the new tops so it could sell them.

Internal marketing

• Internal marketing is about communicating with all employees to make sure they understand your marketing plans and that you are all working towards the same goals.

Why is internal marketing so important?

• Everyone, not just marketing, must work towards the organisational objectives and strategy.

• To make this happen, marketing must communicate the plan to all employees to make sure they are fully involved and committed to rolling the plan out.

• If staff are involved in the plan, they are more likely to be satisfied, motivated and loyal to the organisation and this will be reflected in the level of service they deliver to the customer.

What do we mean by ‘internal market’?

• The individuals and groups that need to be aware of and involved in the plans of marketing

• They may not work in the marketing department but they have a responsibility, nevertheless, for delivering customer value to achieve customer satisfaction

• These people can be defined as part-time marketers.

What do internal markets need?

• As we have just seen, marketing is not just about providing services to external customers.

• Marketers have to provide services internally too in order to make sure that the needs of external customers are met.

• This means that the marketing department is an internal service provider

What kinds of services does marketing provide internally?• For the HR department:

— Marketing may have to advise HR on what skills are needed of the people who join the sales team.

• For the IT department:— Marketing may have to brief the website designers on the

content, look and feel for the site.

• For the sales team:— Marketing may need to brief them on new products and the

features and benefits to push to the customer.

• For the senior management team:— Marketing may need to brief them on new developments so

they are ready to speak to the press.

External Marketing

External marketing is about communicating with your customers and other groups of stakeholders who are outside of your organisation.

What is a customer?

• A customer is the person who makes the decision to buy the product or service.

• There is a difference though between a customer and a consumer.

• They are not necessarily the same person:—A customer is the person who buys the product or

service from your firm.—A consumer is the person who uses the product or

service.

Importance of external marketing

• Differentiation - a business must show how their products and/or services are superior to those of competitors

• Remind – a business should stay in touch with customers and potential customers

• Inform – a business should advise customers of changes, improvements and updates

• Persuade – a business needs to convince a customer to buy their product or service

Quiz

Which statement is incorrect?

1. Marketing is about putting the customer first

2. Only the marketing department is involved in marketing activities

3. Marketing is a business philosophy

4. Marketing should be considered at board level

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Quiz

Which statement is incorrect?

2. Only the marketing department is involved in marketing activities

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Quiz

Choose the right statement to complete the sentence.

Internal marketing is about:

1. Communicating with external stakeholders

2. Communicating with employees

3. Communicating with external stakeholders and employees

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Quiz

Choose the right statement to complete the sentences.

Internal marketing is about:

2. Communicating with employees

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Quiz

What does the acronym DRIP stand for?

1.D

2.R

3.I

4.P

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Quiz

What does the acronym DRIP stand for?

1.Differentiate

2.Remind

3.Inform

4.Persuade

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Test Your Understanding

• Try to think of time when you had a positive experience as a customer. What was so good about the product/service and experience and why was it worth what you paid for it?

• In your current role* think about how the marketing department works with other departments within the business. – Which departments do they work with? – What is communicated to them? – How are they involved in marketing plans? – What services are provided to them?

*If you are not currently working with a suitable organisation use a previous business instead.

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Session Reading

• Core text– Blythe, J. (2012). Essentials of Marketing. 5th Edition. Harlow.

Prentice Hall. Chapter 1.

• Additional reading– Brassington, F. and Pettitt, S. (2007). Essentials of Marketing.

Harlow, Prentice Hall. Chapter 1.

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