3.1 Nature and purpose of marketing

Question 1

What is marketing about?

Answer 1

Marketing is about identifying the particular needs and wants of target-audience customers and then trying to satisfy needs better than competitors.

Question 2

What processes are involved in marketing?

Answer 2

Market research needs to be conducted to identify and analyse the needs of customers, followed by making decisions on product design, pricing, promotion, and distribution.

Question 3

What is the basis of marketing?

Answer 3

Marketing is about getting the right product to customers at the right price to the right place at the right time.

Question 4

How is the distinctive feature between marketing and any other business functions?

Answer 4

Marketing deals with customers more than any other business functions.

Question 5

What is the fundamental goal of marketing?

Answer 5

Fundamentally, marketing is about managing profitable customer relationships; whereby new customers are attracted with the promise of superior value, while keeping and growing current customers by delivering satisfaction.

Question 6

What does the term “market” refer to?

Answer 6

The term “market” refers to a group of customers who are interested in a product, have the means to buy it, and allowed to buy it.

Question 7

What does the consumer market consist of?

Answer 7

The consumer market consists of individuals and households that buy goods and services for personal consumption.

Question 8

How can a market be defined essentially?

Answer 8

A market is essentially a set of actual and potential buyers of a product who share a particular need or want that can be satisfied through the purchase of a good or service.

Question 9

What are the three types of market?

Answer 9

Consumer, business and government market.

Question 10

How are businesses that sell directly termed?

Answer 10

Businesses that sell directly to end-consumers are typically termed ‘Business to Consumer’ (B2C) businesses.

Question 11

What are the effects of new technology and e-commerce on consumer market?

Answer 11

Due to the advancement of technology and e-commence, new B2C businesses such as RedMart and Food Panda have emerged to cater to the evolving needs and demand of customers.

Question 11

Can you give examples of businesses?

Answer 11

In making marketing decisions affecting end-consumers, businesses would often need to consider socio-cultural factors such as demographics which shape consumers’ taste and preferences and affect behaviour and purchasing decisions.

Question 12

What does the business market consist of?

Answer 12

The business market consists of other businesses which buy goods and services for further processing or for use in their daily operating activities.

Question 13

How are businesses that sell directly termed?

Answer 13

Businesses that sell directly to other businesses are typically termed ‘Business to Business’ (B2B) businesses.

Question 14

What is the nature of business buyer demand?

Answer 14

The business market tends to contain fewer but larger buyers, and business buyer demand is derived from final consumer demands.

Question 15

Can you give examples of businesses?

Answer 15

Examples of businesses in the business market include microprocessor chip manufacturer such as Intel which supplies microprocessor chips to computer manufactures; tire manufacturer such as Goodyear which supplies tires to car manufacturers; and distribution services provider such as DKSH, which distributes fast-moving consumer goods to retailers.

Question 16

What are some marketing decisions B2B businesses in the business market value?

Answer 16

B2B businesses sometimes promote their products directly to end consumers to increase business demand > more dependent and work closely with their customers.

Question 17

What opportunities does it offer to businesses?

Answer 17

The government market offers huge opportunities for both large and small businesses, as government organisations are usually major buyers of goods and services.

Question 17

What does the government market consist of?

Answer 17

The government market consists of ministries and statutory boards which purchase goods and services.

Question 18

How does the government buy process work?

Answer 18

• Government organisations usually require businesses to submit bids and would normally award the contract to the lowest bidder.
• In some cases, the government organisation may make allowances for the supplier’s superior quality or better reputation for completing contracts on time.

Question 19

Define marketing indices.

Answer 19

Marketing indices (or indexes), also known as marketing metrics, refer to statistical tools to track and measure changes in specific marketing data over a particular period.

Question 20

What are some characteristics of businesses in the government market?

Answer 20

Businesses that sell to the government usually do not focus their efforts on marketing.

• Government buying typically emphasises on price, and businesses are made to invest in technology to lower costs.
• Some companies have established separate government marketing departments which anticipate government needs and projects and prepare for careful bids.

Question 21

Can you give examples of businesses?

Answer 21

Examples of businesses in the government market include computer manufacturer such as Hewlett-Packard which supplies computers to an entire ministry, or construction company Qingjian International which tenders for Housing Development Board’s projects.

Question 22

Describe the purpose of marketing indices.

Answer 22

Marketing indices serves as a basis for managers to make marketing decisions, as well as allow managers to evaluate the effectiveness of marketing strategies.

Question 22

What marketing indices consist of?

Answer 22

Marketing indices include market size, market growth and market share.

Question 23

Define market size.

Answer 23

Market size refers to the total level of sales of all producers within a market.

Question 24

How is market size measured?

Answer 24

This can be measured in terms of volume of sales (unit sold) or value of goods sold (sales revenue).

Question 25

State the reasons why market size is important to businesses? [3]

Answer 25

1. A marketing manager can determine whether a new market is worth entering or not.
2. Businesses are able to calculate their own market share.
3. The growth or decline of the market can be identified.

Question 26

Define market growth.

Answer 26

Market growth refers to an increase in the size of the market over a specific period of time.

Question 27

How is market growth measured?

Answer 27

It is measured in terms of percentage change in the total size of the market, either in terms of volume of sales or value of goods sold, over a period of time.

Question 28

State the benefit of market growth to the business.

Answer 28

Market growth helps businesses to make decisions such as whether to enter or remain in a rapidly growing market, or whether to exit a market that is declining quickly.

Question 29

What are some factors to consider beyond market growth?

Answer 29

Existing competitors in the market and potential new competitors entering the market that will affect profits, as well as the pace of growth and rate of growth.

Question 30

Define market share.

Answer 30

Market share refers to the percentage of sales in the total market sold by one business.

Question 30

State the calculation of market share.

Answer 30

Sales of business in time period / Total market sales in time period * 100%

Question 31

Why does market share effective?

Answer 31

Market share can measure if the marketing strategy of business is successful as compared to its competitors.

• If the market share of a business is increasing, this means that the business is marketing its products more successfully than its competitors.

Question 32

What is a ‘market leader’ or ‘brand leader’?

Answer 32

A business whose product has the highest market share.

Question 33

State the benefits of becoming the ‘market leader’ or have high market share. [3]

Answer 33

1. Sales are higher as compared to its competitors, and this could lead to higher profits.
2. Retailers will be keen to stock up and promote the best-selling brands. The brand leaders are also likely to be displayed at eye-level on shelves, or at prominent positions in shops.
3. Businesses could tap on the fact that they are brand or market leader and used it in advertising or other promotional materials. Customers are often keen to buy the ‘most popular brand’.

Question 34

What is the job of marketing managers?

Answer 34

Design strategies that will build profitable relationships with the targeted customers.

• the strategies designed are often guided by the orientation and perspectives of the business and management.

Question 35

State the types of alternative concepts. [3]

Answer 35

Production, product and marketing concept.

Question 36

What is the production concept?

Answer 36

The production concept holds the idea that consumers will prefer products that are available and highly affordable.

• Thus, the management should focus on improving production and distribution efficiency.

Question 36

What is product concept?

Answer 36

The product concept holds the idea that customers will prefer products that offer the best quality, performance and innovative features.

Question 37

Why does business adopt product concept?

Answer 37

Businesses focuses on producing goods and services, followed by an attempt to sell them.

Question 38

Why can the production concept often lead to marketing short-sightedness? [2]

Answer 38

Businesses adopting this orientation face the risk of overly focussing on their own operations and neglect the satisfaction of customer needs and building better customer relationships.

Question 39

What are importance aspects of product concept?

Answer 39

The marketing strategy focuses on making continuous improvements on the product since product quality and improvement is an importance aspect of product concept.

Question 40

What can lead to marketing myopia?

Answer 40

Solely focussing on the product itself. > Consumers may be looking for an alternative or better products that what the goods provided by the business.

Question 41

What is marketing concept?

Answer 41

The marketing concept holds the idea that achieving business objectives depends on understanding the needs and wants of customers, and delivering the desired satisfaction better than competitors do.

Question 41

What does marketing concept require to analyse the data? [2]

Answer 41

• The marketing concept requires market research and market analysis to indicate present and future consumer demand.
• Focuses on the attempts to produce what consumers want instead of trying to sell them a product they may not really want to buy.

Question 41

What does the marketing concept focus on?

Answer 41

The marketing concept focuses on identifying the needs and wants of customers, based on market research.

Question 42

List the 3 benefits of adopting a marketing concept.

Answer 42

1. The risks of new products failing in the market is much reduced, especially if effective market research is undertaken.
2. Businesses are likely to perform better and make higher profits if they are able to meet customer needs with appropriate products.
3. Continuous market research will allow for constant feedback from customers, and this means that businesses could adopt and improve their products according to the changing tastes and preferences of customers.

Question 43

What should the marketing objectives be aligned with?

Answer 43

Overall vision and mission of the business

• Should reflect the aim of the business and aid in the achievement of the strategic objectives of the business.

Question 43

State the importance of marketing objectives. [3]

Answer 43

1. Marketing objectives provide a sense of direction for the marketing department.
2. Regional and product sales target could be set based on marketing objectives. The performance and progress of the marketing department can be monitored against the target set.
3. The marketing objectives form the basis of the marketing strategy as well as decision-making on marketing-related matters.
   - Without marketing objectives, a business would not have a clear vision of what it hopes to achieve for its product, and it would be meaningless for the business to plan how to market them.

Question 44

Who should decide on the marketing objectives?

Answer 44

Senior management of the business should determine the marketing objectives, as the objectives would affect the markets and products the business produce in years to come.

Question 45

What can be secondary marketing objectives?

Answer 45

Increasing brand awareness or changing the attitude of consumers.

Question 45

State one key marketing objectives of a business.

Answer 45

Become the market leader

• Having the largest market share or highest profitability.

Question 45

How can profitability be improved?

Answer 45

• Business is considered market leader when it has the highest profitability amongst its competitors.
• Profitability can be improved through increased sales, the use of appropriate pricing strategies as well as the development of new products.

Question 46

What is brand awareness?

Answer 46

Brand awareness refers to the extent in which customers are able to recall or recognise a brand.

Question 47

Why is increasing brand awareness appropriate as a marketing objective?

Answer 47

When a business launches a new product or enters a new market, promotion, advertising and branding activities are some of the ways businesses use to grow brand awareness and recognition.

Question 47

What can brand awareness affect?

Answer 47

Customer’s decision-making on whether to make a purchase.

Question 48

What are the effects of marketing strategy to the attitude of customers?

Answer 48

An effective marketing strategy would improve the attitude of customers, and hence result in better customer ratings.

Question 48

When is the attitude of customers an appropriate strategy?

Answer 48

A recently launched product of a business flopped badly or received negative reviews, or when a business is trying to remove negative perceptions, such as being associated with poor quality.