4 Marketing

Marketing studies how organisations identify what customers need and want, decide which customers to serve, and design products, prices, promotion and distribution that meet those needs better than competitors do. Every organisation has to attract and keep customers, users or donors, so marketing decisions affect its sales revenue, its reputation and its long-term survival.

Questions that frame the unit

The unit is built around questions that marketing managers face in any market.

• Why do some well-designed products fail while simpler ones succeed?

• Should a business aim at the whole market or at a small, specialised group of customers?

• How can a business charge more than its competitors and still keep its customers?

• Is social media a cheaper way to promote a product, or a riskier one?

• Should a business sell the same product in the same way in every country, or adapt it to each market?

What the unit covers

The unit has six subtopics. Four are studied at SL and HL; two are HL only.

How the subtopics connect

The unit starts with the meaning of marketing and the choice between market orientation, which starts from customers’ needs, and product orientation, which starts from what the business can make. It also measures a business’s position in its market through market share and market growth. These figures show whether a business is gaining or losing ground, and they set the context for every later decision.

The concept map shows how planning sits at the centre of the unit. A marketing plan sets marketing objectives that follow from the business’s overall objectives, divides the market through market segmentation, chooses a target market and decides how the product will be positioned, often with a position map. The plan depends on information. Market research supplies data on customers and competitors, collected through primary research and secondary research and from a sample chosen to represent the population. At HL, sales forecasting adds estimates of future sales built from past trends.

The marketing mix puts the plan into practice. Its seven Ps cover the product and its product life cycle, branding, pricing methods, promotion, distribution channels, and the people, processes and physical evidence that matter most when the product is a service. A mix works when its parts fit together and suit the target market: a premium price needs a product, promotion and place that support a premium brand. At HL, international marketing asks how far the mix can stay the same in foreign markets and how far it must be adapted.

Marketing links to the rest of the course at many points. Marketing objectives come from the business’s objectives and must take account of its stakeholders; prices depend on costs; promotion is paid for from a budget; and the product must be produced in the right quantity and quality. Among the toolkit tools, a SWOT analysis and a STEEPLE analysis audit the business and its market, the Ansoff matrix classifies growth strategies, the Boston Consulting Group matrix analyses a product portfolio, and descriptive statistics summarise research data.

Change, creativity, ethics and sustainability in the unit

How SL and HL differ

HL students study everything SL students study, plus two HL-only subtopics and HL-only parts of two SL subtopics. The HL-only subtopics are:

• 4.3 Sales forecasting: qualitative forecasting methods and time series analysis, including the trend, moving averages and seasonal variation, with an evaluation of the benefits and limitations of forecasting.

• 4.6 International marketing: the reasons for entering foreign markets, the methods of entry, the opportunities and threats of operating abroad, and the choice between standardisation, adaptation and glocalisation of the marketing mix.

The SL subtopics with HL-only parts are:

Several HL toolkit tools are used often with the unit. Porter’s generic strategies show differentiation as a competitive strategy, which the marketing planning subtopic introduces at HL; Hofstede’s cultural dimensions compare the cultures of foreign markets; simple linear regression extends sales forecasting; and contribution, Gantt charts and critical path analysis support pricing decisions and the planning of campaigns and launches.

Assessment

Unit 4 is examined in Paper 1 and Paper 2. Its SL content can appear in either paper at both levels; the HL-only content (sales forecasting, international marketing, the importance of market leadership, the three extra pricing methods and price elasticity of demand) appears only in Paper 2 at HL and in Paper 3, never in Paper 1. Paper 1 questions on the unit are mostly qualitative, for example explaining a product’s position in its life cycle or analysing the case organisation’s promotion.

Paper 2 brings the unit’s calculations and constructions: market share and market growth, a position map plotted from data, a product life cycle or BCG matrix drawn and annotated, and at HL moving averages and price elasticity of demand. Extended responses often ask students to evaluate a marketing strategy, such as social media marketing, a pricing method, an extension strategy or a method of entering a foreign market, or to recommend an appropriate marketing mix for a given product.

Studying the unit