CHAPTER 17: THE NATURE OF MARKETING
AS LEVEL BUSINESS
What is Marketing?
Write down what you currently know about marketing in business.
Share your thoughts with the class.
Marketing is the process of planning and undertaking the conception, pricing,
promotion and distribution of Presenter
goods andname
services to create and maintain
relationships that will satisfy individual and organisational objectives.
- definition from Contemporary Marketing Wired, by Boone and Kurtz
Marketing involves
• market research
• product design and packaging design
• pricing, advertising and distribution
• customer service
You will learn about all the functions of
marketing over the next 6 weeks
20XX 3
Marketing objectives
• Marketing objectives need to be linked to corporate objectives and
be focused on helping the business achieve those overall targets.
• For example, if a business has a corporate objective ‘to increase market
share’ the Marketing objectives they may focus on to achieve this could
include:
• Develop a new product range that appeals to a new market segment.
• Expand distribution channels to reach more customers, i.e. online
• Develop new promotional strategies to increase brand awareness.
• Marketing objectives and marketing decisions cannot be set or
taken in isolation from the rest of the business. There must be
coordination between all departments.
20XX 4
Supply and Demand
Consumers ‘shop around’ to try and find the right product for the best
price. Therefore, marketing managers need to know how markets operate
when setting prices.
If a business can produce the product at a cost below the market price (the price
other businesses are selling the product for), then the product should be
profitable.
20XX 5
What is demand?
Think about a product that you might buy regularly.
• Would you still want to buy that product if the price when up?
• What about if the price went down?
Here is some information about sales in a business. Plot this information on a graph
(quantity is on the x-axis and price is on the y-axis).
Price Quantity
demanded (units)
1000 4000 What does your graph
2000 3000 show? In your own words
describe the relationship
3000 2000 between demand and price.
4000 1000
© Cambridge University Press 2021
A demand curve
Key notes when drawing diagrams:
• Quantity is always on
the x-axis.
• Price is always on the y-axis.
• A change in price moves a consumer up or down the
demand curve.
• It is a straight line but called
a CURVE.
• The demand curve slopes
down from left to right.
• The lower the price, the
more that is demanded.
The higher the price, the
less that is demanded.
Figure 17.1
© Cambridge University Press 2021
What is supply?
• Imagine you are a supplier:
• What would happen to the amount you wanted to supply if the price in the market
increased? Why?
• What would happen to the amount you wanted to supply if the price in the market
decreased? Why?
Here is some information about quantity supplied in a business.
Plot this information on a graph (quantity is on the x-axis, and
price is on the y-axis).
What does your graph show? In
Price Quantity supplied
(units) your own words, describe the
relationship between supply and
1000 1000 price.
2000 2000
3000 3000
4000 4000
© Cambridge University Press 2021
A supply curve
Key notes when drawing diagrams:
• Quantity is always on
the x-axis.
• Price is always on the y-axis.
• A change in price moves a consumer up or down
the
supply curve.
• It is a straight line but called
a CURVE.
• The supply curve goes up
from left to right.
• The higher the price, the
more they want to supply.
The lower the price, the Figure 17.2
less they want to supply.
© Cambridge University Press 2021
Activity 17.2 p. 276 (question 1 only)
20XX 10
Answers Activity 17.2 p. 276
1. Supply factors:
• Weather: flooding in Bangladesh and Indonesia, cold weather in Vietnam.
• Town development.
• The price of alternative foods rising will cause producers to switch from rice
production to alternative foods.
Demand factors:
• Rise in consumer incomes.
• Increasing population is hinted at though not stated. As a necessity, the demand
for rice will increase as the population increases.
20XX 11
Homework
1. Define the term ‘equilibrium price’.
2. Define the following markets and provide an example of business that operates in each one of
the markets.
• Industrial markets (business to business – B2B)
• Consumer markets (business to consumer - B2C)
• Local market
• National market
• International market (global market)
3. Explain the difference between a business that focuses on market orientation (consumer
orientation) and a business that focuses on product orientation. Provide an example for each.
Sample footer text
Equilibrium Price
(market equilibrium)
A market is said to be in equilibrium when where is a balance between demand
and supply, the equilibrium price is determined when demand equals
supply.
If something happens to disrupt that equilibrium (e.g. an increase in
demand or a decrease in supply) then the forces of demand and supply
respond (and price changes) until a new equilibrium is established.
20XX 13
Equilibrium price
When we put the two curves
together, we get the
EQUILIBRIUM price.
Equilibrium price is at the point
where demand equals supply
(the point at which the supply
and demand curves intersect).
Figure 17.3
© Cambridge University Press 2021
Shifting demand and supply
• Price will lead to a MOVEMENT on
the same curve, but sometimes the
conditions of demand and supply can
change, and this can cause a new curve
(called a SHIFT).
• If it means MORE is demanded or
supplied, a new curve is created to the
RIGHT.
• If it means LESS is demanded or
supplied, a new curve is created to the
LEFT. Figure 17.4
It is important that you
comment on what happens to
PRICE and QUANTITY as a result,
and the impact on the firm.
© Cambridge University Press 2021
Markets
Markets are where buyers and sellers meet to engage in exchange. The daily or weekly fruit and vegetable
market is one example of this. Shopping centres and auctions are other examples of markets.
A market does not have to be in a physical place as these days many markets exist online.
1. Define the following markets and provide an example of business that operates in each one of the markets.
• Industrial markets (business to business – B2B) deals with products bought by businesses. These include specialist industrial
machines, trucks and office supplies. Consumer markets (business to consumer - B2C) A consumer market deals with products
bought by the final users of the products.
• Local market – include business that sell only to local customers and local businesses, examples include individual cafes &
restaurants, hair salon, fruit and vegetable vender.
• National market – includes businesses selling their products to customers throughout the whole country. This gives greater potential
to increase sales compared to local markets.
• International market (global market) – Businesses expanding into foreign markets is a significant strategic decision, these
businesses are commonly referred to as multinationals as they operate and sell in many different national markets.
Markets
Explain the difference between a business that focuses on market orientation (consumer orientation)
and a business that focuses on product orientation. Provide an example for each.
A market orientated approach means a business reacts to what customers want. The decisions taken
are based around information about customers' needs and wants, rather than what the business thinks is
right for the customer.
A product orientated approach means the business develops products based on what it is good at
making or doing, rather than what a customer wants. This approach sometimes leads to unsuccessful
products - particularly in well-established markets.
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