What is marketing and why is it important?

Definition: Marketing is the work done by the business in

Identifying customer wants and needs

• Informing the customer about the forms products
• Persuading customers to purchase the firms products

By its definition, we can see that marketing is focussed on actual and potential business customers.

  

Importance: We study marketing because it is an important business process. Marketing is important to the business it
Provides the business with information on the products that customers will want to purchase

• informs customers about the products offered by the business that will satisfy their wants and needs
• persuades customers to buy the products offered by the business that will satisfy their wants and needs

Effective marketing supports the most important business objective of business survival as follows

Effective marketing means that a business produces products that will meet customer wants and needs

1. Effective marketing informs and persuades customers to buy these products
• this increases sales for the business
• this increases business profits (assuming of course that the increase in sales are greater than any increase in costs to product and promote the new products!)
• increased profits help a business to survive in the long term – the most important long term objective of any business

 

For Example: For example, Apples iPad meets customer needs for a multi-featured portable wireless device. Those needs were identified by thr careful study of existing and potential customers by Apples marketing department. In addition the marketing department has promoted the devide (to inform and persuade) customers to buy it.

The iPad has sold amazingly well – leading to increased profits for Apple. Apple can use those profits to ensure its long term survival (e.g.by investing in new markets, new products etc)

Steve Jobs's new trick: the Apple tablet

Apple - is reportedly just about to launch a tablet computer – small enough to carry in a handbag or briefcase but big enough to comfortably surf the web, read newspapers and watch films. It could be Apple's latest billion-dollar jackpot.

This article mentions some of Apples strengths - in summary you should realise that

1) Apples very loyal Customer base actually generates word of mouth promotion for new apple products
Feverish speculation all over the internet, gadget shoppers nearing mass hysteria and pundits predicting our lives will never be the same. It must mean that an Apple product launch is on the way.

2) Customers (employees too?) are strongly supportive of the charismatic leadership style of Apple CEO Steve Jobs
“Apple product launches are celebrated rituals where the talismanic Jobs, in black sweater and jeans, stands on a stage in San Francisco and unveils the company's latest innovation, cheered by adulatory crowds with near religious fervour. The Californian giant has sold more 200 million iPods since their launch in 2001.

3a) Apples strong customer base allows it to set a Premium Pricing Strategy for the Tablet (or any other new product).

Gene Munster, a technology research analyst estimated that an Apple tablet, with an onscreen keyboard like the iPhone, would cost around $600 (£363), putting it between the highest-end iPod Touch at $399 and the MacBook, which starts at $999. At $600, Munster calculated that sales of 2 million tablets could add $1.2bn (£727m) to Apple's sales next year.

3b) This pricing strategy allows Apple to increase sales revenues even at a time when its laptops may be in the the maturity stage of their product life cycle
Sales of Apple laptops are stalling as they face competition from netbooks, the smaller and lighter laptops that have proved popular among students. Rival companies have also introduced tablets but lack the hype that guarantees Apple mountains of free publicity

Apple's iPod Problem

A good article from Asian Business week that covers some aspects of the product life cycle:



Level 1 - Knowledge
1) Define the term ‘Product Life Cycle”

Level 2 - Application
2a) Based on the information in paragraph 2, explain why “Apple may have an iPod problem”
2b) Construct a Product Life Cycle. Where is the Apple iPOD in its product life cycle

Level 3 - Analysis
Examine the factors that that resulted in Apples chares falling over 55% to $UD 92 in the last year.

Level 4 - Evaluation
In your role as a financial advisor recommend whether your investors should buy or sell shares in Apple.

Note Level 1 – Level 4 are questions based on IB standards where

• Level 1: Knowledge
• Level 2: Application
• Level 3: Analysis
• Level 4: Evaluation

Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). The meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from

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