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Embracing Challenges: Insights from Walter Bagehot on Market Perception

In this lesson from IB Business & Management, we explore the importance of understanding market dynamics. Reflecting on Walter Bagehot's assertion, "The greatest pleasure in life is doing what people say you cannot do," we delve into how overcoming challenges and defying expectations can drive success in business. Understanding market perceptions and consumer behavior is key to developing effective marketing strategies. Join us as we analyze the psychological aspects of market engagement and their implications for businesses aiming to innovate and challenge the status quo.

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Embracing Challenges: Insights from Walter Bagehot on Market Perception

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  1. IB Business & Management

    Unit 4.1 The Role of Marketing Lesson 1: The Market pp. 439-443
  2. 1. Think about it… “The greatest pleasure in life is doing what people say you cannot do.” – Walter Bagehot (1826-1877), British journalist Why do you think he said this? How does this pertain to marketing? What do you think? …
  3. 2a. An overview… Remember back in Unit 1.1 and Unit 1.2, when we talked about NEEDS and WANTS? Needs are? Necessities you must have to survive: food, shelter, water, NOT your cell phone! Wants are? The desires you have: nice car, cell phone, new computer, etc. Marketing addresses people’s needs and wants. It is about making customers want to buy a product. Looks at the reasons why people decide to buy The price, color, size, special feature of the product. Marketing takes a want and turns it into a need. …
  4. 2b. An overview… Think about this: Do you know this man? Bob Marley (1945-1981) Once said that he did not NEED a BMW. So, you are in the marketing department… How are you going to turn this product into a need? The 4 P’s of marketing and your departments main objectives are: Products Price Place Promotion …
  5. 3a. The Market What is it and why is it important? It is a place where customers and suppliers trade. It exists where there is a demand for a product and business try to satisfy that demand. Two kinds of markets: Consumer markets: the general public Industrial / Commercial markets: business and governments Within each market there will be rival products and suppliers. Each business will be interested in three things: 1. the size of the market 2. the growth rate within the market 3. the firm’s share of the market. Lets take a closer look at each one….
  6. 3b. The Market: Market Size Markets will differ in size. For example let’s look at the fast food industry… Is there room for growth? Why do you think so? What about the car industry? What about the market for horse saddle’s? Now, the market size can be measured in a number of ways: A. Customer base: The total number of potential customers: Think about expanding into China…how many people live there? How many are between the ages of 22-29? Think about an online business and the internet. How many people does the internet serve? …
  7. 3c. The Market: Market Size B. Barriers to entry: The total number of suppliers in the market. The kind of industry, think about entering the oil and aircraft industry…easy to do? Huge set up costs…. With low barriers to entry there will be a lot more firms operating there on a smaller scale. C. Location, Location, Location : Some markets focus on certain countries / regions. Do you know Adidas? They are the market leader in Tae Kwon Do equipment.
  8. 3d. The Market: Market Growth Refers to an increase in the size of the market over a period of time. This is measured by an increase in the value or volume of sales in the market. For example: If sales revenue in a market rises from $200 million to 220 million, the market is to have grown by 10%. …
  9. 3e. The Market: Market Share There are many rival products and firms in the market within any given market. Your business also contributes to this market share. But how by how much? Market share = sales revenue of firm x 100 total sales revenue in market If you increase your market share you will increase your profits. But having the largest market share might not be the most profitable. Think about your costs  Other benefits to having a larger market share: Status being number one; a market leader. Economies of scale Pricing power So how do you increase your market share? Promotion of brands (Unit 4.3) Product development (Unit 5.6) Motivation / training (Unit 2.5) Establish property rights (Unit 3.5 and 5.6) Use more efficient channels of distribution (Unit 5.6)…
  10. 4a. The Nature of Marketing There is no single, set definition of the term marketing: Marketing objectives of each and every firm differ. The Chartered Institute of Marketing defines it as “the management process involved in identifying, anticipating and satisfying consumer requirements profitably.” Wow! That’s a mouth full. Al Reis and Jack Trout believe it is “the battle for your mind.” Your textbook gives more definitions please read them. Get on the internet and see what is out there as well. It is all about being FIRST in the mind of the consumer. Don’t believe me? Think about it, Who was the second man to walk on the moon? Who was first to invent the car? Who was second? Who was the second person to fly across the Atlantic?  …
  11. 4b. The Nature of Marketing Marketing will either make or break a company. It will affect the sales and profits of the organization. Marketing alone will not guarantee success either; marketing must work along side of other functional areas within a business such as: Operational management: The production department will work very closely with the marketing department. Why? Finance: Together they will set appropriate budgets. Why is this important? Human resource management: Marketing data can help this department to identify staffing needs. …

  12. IB Business & Management

    Unit 4.1 The Role of Marketing Lesson 2: Market & Product Orientation pp. 444-450
  13. 1. Product Orientation Marketing has changed over the years from: product-orientated (getting customers to buy the product) to market-orientated marketing (meeting actual needs or desires of customers). Product orientation: It is inward looking. The focus is on selling products that a company makes, rather than making products they can sell. Businesses hope the customers will buy their product. Say’s Law: Supply creates its own demand. Concept today is customers will pay higher prices for a higher quality good. These companies assume to know what you, the customer wants. This is a very risky strategy to employ. You will find out very quickly that you will need, when developing products, to take the customer into consideration. …
  14. 2. Market Orientation Also called Consumer orientation. This approach is an outward looking one. The focus is on making products that a business can sell, rather than selling products that they can make. Main focus is on the consumer in order to: Identify Design Develop and Supply products to meet their needs and wants of customers. If you ignore your customer, you will lose competitiveness. Two main advantages to using this approach: Flexibility: respond quicker to changes Less risk: by conducting market research, you will have a greater success meeting the wants and needs of your customers. Market orientation approach tend to be expensive because of the market research. So how can you decide which approach to use? It will depend upon: The market: highly technical products vs. mass consumer market products. Organizational culture: “the customer is always right” – market oriented. Nature of barriers to entry: not much competition – less customer focused. …
  15. 3a. Marketing of Goods & Services What is a service? Is an intangible product such as a train ride, getting a hair cut. There is no ownership of the product and it is perishable. Customers pay for services in order to fulfill wants and needs. Can you think of any services that would fulfill a want or a need? Marketers will use the 4P’s (marketing mix) for goods; the marketing of services includes three additional elements: 1. People 2. Processes 3. Physical evidence. Together these form the 7 P’s in the marketing mix. Let‘s take a closer look…
  16. 3b. Marketing of Goods & Services People: Remember services depends on the goodwill of all employees. How can you ensure good service: Appearance and body language Aptitudes and attitudes Feedback Efficiency Processes: Refers to the way in which a service is provided and delivered. If you are selling a service how do you demonstrate to customers the benefits of services? Payment methods Waiting time Customer service After-sales care Physical Evidence or environment: Refers to the tangible aspects of a service. What’s in a 5-star hotel? What do you see when you first walk into a place like this? Challenges facing you as a manager in delivering quality customer service: Correcting mistakes Measuring productivity People management …

  17. IB Business & Management

    Unit 4.1 The Role of Marketing Lesson 3: Marketing in NPO pp. 450-454
  18. 1. NPO’s Marketing in NPO’s is somewhat different than the market-led strategies by profit seeking companies. Tends to be more informative They use social marketing strategies: main aim is not to make a profit, but for the public to take action. Donating money… Governments and other departments are opting to use this strategy. They will also use catchphrases or slogans as a strategy. “Your Country Needs You”, a slogan during WWI in England. Kotler, a marketing guru, coined the term de-marketing: the use of marketing to reduce the demand for socially undesirable products, like tobacco. Funding can be a huge problem for NPO’s, they will use public relations to give them a better public image, to increase awareness. The use of the internet has help to cut marketing costs down for the NPO’s. They will also strive to increase their distribution channels (Unit 4.6) …
  19. 2. Elements of a Marketing Plan A marketing plan is a document outlining a firm’s marketing objectives and the strategies to be used to achieve these objectives. The plan is usually preceded by a marketing audit. This is a review of the current position of the firm's marketing mix, in terms of SWOT. May address issues of competition, an assessment of the effectiveness of the firm’s marketing. From the audit you the manager, can now proceed on to the marketing plan. It will include the following: SMART marketing objectives (Unit 1.3). Methods for market research / Identifying target markets. SWOT of the competitors in the market Outline of the marketing mix 4/7 P’s Details of the marketing budget (how much is this going to cost the firm) Outline any problems that you may encounter and strategies on how to deal with them. Do not forget to use a PEST analysis  Main advantage: Improves the chances of success. Limitations: Many firms do not have time or resources to plan their marketing. Plans can become outdated very quickly. Can be inflexible, do not allow for sudden changes.
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