3 1 Setting marketing objectives AQA Alevel Business

3. 1 – Setting marketing objectives AQA A-level Business © Hodder & Stoughton Limited 2015 1

Learning outcomes • External and internal influences on marketing objectives and decisions AQA A-level Business © Hodder & Stoughton Limited 2015 2

Value of setting marketing objectives • To act as a focus for decision making and effort • To provide a yardstick against which success or failure can be measured • To improve coordination, by giving teams and departments a common purpose • To improve efficiency, by examining the reasons for success and failure in different areas • To motivate staff and improve their performance by setting challenging, but realistic targets • To establish priorities, so that staff understand the relative importance of different objectives

Benefits of setting marketing objectives • They should be SMART: Clear objectives mean staff make consistent decisions • Specific marketing objectives provide clarity for employees and allow them to see whether they have succeeded or failed to meet expectations • If a department have a common purpose, then they are more likely to adopt a team approach, enabling managers to provide a more united and coordinated approach to problem solving • Measurable and timed objectives allow managers and individuals to improve efficiency • If marketing objectives are achievable, but through significant effort, then motivation will be higher • If the marketing department gives a clear indication of the relative importance of each objective, it should enable employees to recognise their own priorities, so that their actions are consistent with the needs of the business as a whole

Problems of setting marketing objectives • External changes are not always easy to predict, so therefore marketing objectives may be based on incorrect assumptions • Internal changes should be foreseeable and less likely to cause problems, but staff turnover, higher training costs and operational problems may impact on the usefulness of marketing objectives • Marketing objectives may conflict with each other e. g. Increasing market share through cutting prices may hinder the objective of maximising sales revenue • There may be unclear priorities for staff e. g. sales staff working on commission may hinder the long-term brand reputation of the business – PPI • The marketing budget may be too small to meet objectives • If objectives are imposed rather than agreed, it may lead to a drop in productivity or motivation • There may be a reluctance to set realistic objectives in times of difficulty e. g. Setting a target for a reduction in sales revenue • People like to set ambitious targets, but this means marketing objectives often lose their value as they are too ambitious

External and internal influences on marketing objectives and decisions External factors are those outside the business, often listed under the heading PESTLE, that may impact what objectives a firm sets. They may include: • Political & legal factors - Government policies impact marketing and what firms can do, for example, advertising bans on cigarettes and unhealthy foods during children’s television. Multinational firms need to be aware of foreign legislation and policies. How do government policies impact consumer spending - for example, taxation and spending cuts? • Economic factors - Is the economy in growth or decline? What are disposable income levels? Can a firm compete on price or quality? What is the current level of Interest rates? How does this impact the amount of borrowing and therefore availability of funding for marketing strategies? How does this impact consumer spending, particularly on high price items like cars and homes? • Social factors – What are existing tastes and fashions? How do demographic factors impact the company’s objectives and actions? AQA A-level Business © Hodder & Stoughton Limited 2015 6

External and internal influences on marketing objectives and decisions • Technological change – How do developments in technology impact marketing activities - for example, social media, mobile phones, apps? How are rivals using technology? What do consumers expect? How is market research gathered? • Ethical and environmental factors – Do consumers care about these issues? Do the company’s products cause any negative ethical issues? Is there any legislation in this area? Can higher prices be charged for more ethical products? Are workers treated ethically? • State-of-the-market factors – Is there growth in the market? Is the company able to focus on growth, or just on survival? • Competitor actions – How intense is the rivalry? How well are rivals performing? Will they operate in a niche or mass market? What are current market shares? What strategies are they pursuing? • Customers and suppliers – What do consumers expect from the firm - for example, price, quality, service, reliability, etc. ? Can suppliers meet the expectations and needs of the firm? AQA A-level Business © Hodder & Stoughton Limited 2015 7

Internal influences on marketing objectives and decisions Internal influences are those factors inside the business and include: • Business/corporate objectives – The marketing objectives are set to ensure the marketing department contributes towards achieving the overall corporate objectives. A business must have an integrated approach to marketing and therefore if a company has established a certain type of image, for example high quality products or ethics, then all actions which are guided by objectives must match the brand image established. • Finance – The financial position of the business will determine what resources can be allocated to achieve the objectives. Objectives allow firms to establish their priorities and therefore where finances should be allocated. • Human resources (HR) – The size, skills and motivation of the workforce will determine what marketing objectives can be achieved. The levels of training, customer service, decision-making and motivation of the workforce all impact their ability to achieve marketing objectives. • Operational issues – A company must offer an integrated approach so if quality is a key brand feature than the marketing must focus on this and the product must match. The operation must ensure the company can deliver on promises, for example, internet sales, delivery times, stock quantities, etc. • Type of product – What is the company know for? Does it have a unique selling point? Has it established a reputation for a particular type of product? Is it a necessity or a luxury? What are the industry standards or marketing and budgets? AQA A-level Business © Hodder & Stoughton Limited 2015 8

Mindmap • Create a mindmap on the internal and external factors affecting marketing objectives and decisions

Summary • Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably. • However this is very difficult and is impacted by the company’s budget, existing skills, experience, products/services, existing brand image and the action of its rivals. • A successful marketing department must set objectives in line with the overall corporate objectives and differentiate the business enough from its competitors to establish brand loyalty, and sales growth resulting in high market share and profits. AQA A-level Business © Hodder & Stoughton Limited 2015 10

Example business: Lenovo • • Lenovo is the world's biggest maker of personal computers. • Despite this the PC market is decreasing with consumers increasingly using tablets and mobile phones to complete tasks such as web browsing and emails. • Lenovo therefore has made the decision to diversify away from the shrinking global PC market and 2014 was the first year they sold more smartphones than PCs, with a record sales volume of 15. 8 million units, a 39 per cent sales growth from 2013. • To enhance their ability to compete in the mobile market and grow this area of the business they have purchased Motorola Mobility from owners Google for $3 billion. • Lenovo has stated that it feels this is an area that will quickly begin contributing to their performance and develop into one of its pillars for long-term, sustainable growth. In 2014 they saw massive increases in net profit as sales of their laptops were much better than the industry average. AQA A-level Business © Hodder & Stoughton Limited 2015 11

Exam-style questions 1. Do you think it is more important for Lenovo to focus more on building ‘brand loyalty’ than other potential marketing objectives in the coming years? Justify your view. (16 marks) Exam tip: • It is often useful to compare and contrast examples or data from a case study to help support a judgement in a question like the one above. • Use an example or piece of data to support you point and another to show the alternative point is the weaker option. • This is a great way to gain evaluation marks and convince the examiner your argument is fully supported and the correct one to choose. AQA A-level Business © Hodder & Stoughton Limited 2015 12

Structure • 3 paragraphs • Paragraph 1: – State that brand loyalty is a key marketing objective – Quote part of the case study that supports this point – Explain why this information supports this point • Paragraph 2: – State that brand loyalty isn’t the most important objective OR state another marketing objective that is – Quote part of the case study which supports this second point – Explain why this information supports this point • Paragraph 3: – State what the most important issue facing the business is – Suggest which objective is most important considering this issue and explain why – Explain why the other objective is not as important – Then explain the potential problems of selecting your option

Activity Easy. Gym is run in the same way as Easy. Jet. Customers are offered a very basic, low-cost service at a very low price. Easy. Gym is an example of how much an organisation’s corporate aims can limit its scope for marketing strategies. Its philosophy is based on minimising costs through eliminating unnecessary expenditure. This allows the firm to charge low prices to customers. Marketing costs must also be minimised. Ryanair and Primark are companies that operate on a similar philosophy. 1. Select two marketing objectives that you believe would be unsuitable for budget companies such as Easy jet/Ryanair. Explain why you believe this. 2. Select three marketing objectives that you believe would be suitable for budget companies such as Easy jet/Ryanair. Explain why you believe this. AQA A-level Business © Hodder & Stoughton Limited 2015 14