Establishing Market Objectives (HSC SSCE Business Studies): Revision Notes

Establishing Market Objectives

What are marketing objectives?

Marketing objectives are the realistic and measurable goals that a business aims to achieve through its marketing plan. Setting clear marketing objectives is considered the most important step in the marketing planning process. Without defined objectives, a business cannot effectively plan or implement marketing strategies, nor can it measure success.

Marketing objectives must align closely with the overall business goals, but they differ in focus. While business goals may be broad and cover all aspects of operations, marketing objectives are specifically customer-oriented and concerned with products and markets. They must be specific, measurable, and time-bound. For example, rather than stating "increase sales", an effective marketing objective would be "increase market share by 10% within the next 12 months".

Three key marketing objectives

Businesses typically focus on three common marketing objectives:

• Increasing market share — capturing a larger proportion of total industry sales
• Expanding the product mix — broadening the range of products offered
• Maximising customer service — improving how the business meets and exceeds customer expectations

Each of these objectives serves a distinct purpose in helping businesses grow and maintain competitive advantage. Let's examine each in detail.

Increasing market share

Market share refers to the business's proportion of total industry sales for a particular product. It is typically expressed as a percentage of the total market. For businesses that already dominate their market, increasing market share becomes a crucial objective because even small percentage gains can translate into substantial profit increases.

Why market share matters

Businesses invest significant resources in gaining additional market share for several reasons:

• Higher profitability — A larger market share often means greater economies of scale and improved profit margins
• Competitive advantage — Market leaders can negotiate better terms with suppliers and command premium pricing
• Brand recognition — Businesses with larger market share typically enjoy stronger brand awareness
• Advertising revenue (in media industries) — Higher market share allows businesses to charge more for advertising space

Market share in practice: television networks

Australian free-to-air (FTA) commercial television broadcasters provide an excellent example of market share competition. Networks such as Nine Network, Seven Network, and Network Ten constantly compete to increase their share of the viewing public. They measure this through program ratings, which estimate how many television sets are tuned to a particular program.

The network achieving the highest ratings can charge advertisers significantly more for commercial time slots. To maximise their market share, networks offer a diverse range of programs (products) designed to attract the largest possible audience.

Case study: Google's market dominance

Market share in the ice cream industry

The Australian ice cream manufacturing industry generates $131 million in annual profits on a turnover of $1.1 billion. The market is concentrated among a few major players:

• Regal Cream Products (Bulla): 24.7%
• Peters Food Group: 24.5%
• Unilever Australia: 20.7%
• Norco Co-operative: 10.2%
• Other businesses: 19.9%

While the industry previously experienced strong growth, rising health consciousness among consumers has slowed industry expansion. In response, major ice cream manufacturers have introduced low-fat and low-sugar product ranges to maintain and increase their market share by appealing to health-conscious consumers.

Expanding the product mix

The product mix (also called product range) refers to the total variety of products a business offers to customers. Expanding the product mix represents a key marketing objective for most businesses, as a broader range of products typically leads to increased long-term profitability.

Why businesses expand their product mix

Several factors drive businesses to expand their product offerings:

• Changing customer preferences — Consumer tastes evolve over time, requiring businesses to adapt their product offerings
• Market saturation — When growth in existing products slows, new products provide additional revenue streams
• Risk diversification — A broader product mix reduces dependence on any single product
• Competitive pressure — Competitors' new products may erode market share if not matched
• Targeting different market segments — Different products can appeal to distinct customer groups

Understanding customer needs

To develop an effective product range, businesses must thoroughly understand their customers' needs and preferences. Each item in the product line should target specific market segments and satisfy particular customer requirements. Market research, customer feedback, and trend analysis help businesses identify opportunities for product expansion.

Counter-example: Aldi's limited range strategy

Not all businesses pursue product mix expansion as an objective. Aldi demonstrates that a contrasting strategy can also succeed. The discount supermarket chain deliberately maintains a very limited product range of approximately 1,500 items, compared to 20,000-30,000 items in large Coles or Woolworths stores. The company focuses overwhelmingly on private-brand products.

Maximising customer service

Customer service encompasses how well a business meets and exceeds customer expectations across all aspects of its operations. Of the three marketing objectives examined, maximising customer service is arguably the most important because it directly influences customer satisfaction, loyalty, and repeat purchase behaviour.

The importance of customer service

Excellent customer service creates multiple benefits for businesses:

• Improved customer satisfaction — Customers who receive superior service develop positive attitudes toward products
• Repeat purchases — Satisfied customers are more likely to make future purchases
• Customer loyalty — High service levels build long-term customer relationships
• Positive word-of-mouth — Happy customers recommend the business to others
• Competitive differentiation — In markets where products are similar, service quality distinguishes competitors
• Reduced marketing costs — Retaining existing customers costs less than acquiring new ones

The power of negative word-of-mouth

Research demonstrates the significant impact of poor customer service. One dissatisfied customer typically tells 11 other people about their negative experience. Each of those 11 people, in turn, tells approximately 5 others. This multiplier effect means a single poor service experience can negatively influence 56 potential customers (1 × 11 × 5 + 11 = 56 people who hear about the problem).

Modern customer service approaches

Customer service can no longer be viewed as simply explaining refund policies or operating a complaints department. Instead, it represents an organisational attitude and culture that everyone within the business must adopt. The traditional saying "the customer is always right" remains relevant because customers are the lifeblood of any business.

Effective businesses recognize that to retain existing customers and attract new ones, they must continuously communicate with and listen to their customer base. This requires moving beyond reactive problem-solving to proactive service excellence.

Strategies to maximise customer service

Businesses can implement several strategies to achieve superior customer service:

1. Direct customer feedback — Regularly ask customers what they want and need through surveys, focus groups, and feedback mechanisms
2. Employee training and recognition — Train all staff in customer service principles and reward employees who demonstrate excellent customer service
3. Market trend anticipation — Conduct ongoing market research to identify emerging customer needs and preferences before competitors do
4. Competitive analysis — Monitor what competitors offer and regularly review your product mix to ensure it remains competitive
5. Relationship building — Establish and maintain long-term relationships with customers through loyalty programs, personalised service, and consistent quality
6. Customer-oriented culture — Encourage employees to focus attention on meeting customer needs (customer-oriented approach) rather than simply making sales (sales-oriented approach)

Case study: Melbourne Cricket Club

Exam technique: analysing marketing objectives

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