Setting Marketing Objectives (AQA A-Level Business): Revision Notes

Setting marketing objectives

What are marketing objectives?

Marketing is the business function that connects what a company offers with what customers need and want. The Chartered Institute of Marketing defines it as "the process responsible for identifying, anticipating and satisfying customer requirements profitably".

Marketing objectives are the specific goals that a business sets for its marketing activities. These objectives should form part of the overall corporate business objectives and fit within the business plan and strategy. They provide clear targets for the marketing department to work towards.

Types of marketing objectives

Sales volume and sales value

Businesses often set objectives related to how much they sell:

• Sales volume refers to the number of units sold (e.g. 10,000 chocolate bars)
• Sales value refers to how much those sales are worth in monetary terms (e.g. $25,000)

For example, a car manufacturer might set an objective to sell 50,000 vehicles (volume) worth $1.5 billion (value) in the next financial year.

Market size

Market size represents the total sales available in a particular market. While it's difficult to use market size alone as an objective, understanding market size helps businesses set realistic targets for sales, growth, and market share. If a business knows the total market is worth $500 million, it can better judge what percentage of that market it can realistically capture.

Market and sales growth

Market growth involves targeting an increase in overall sales to either maintain or improve market share. This is particularly important in growing markets where standing still means falling behind competitors.

Businesses need to consider whether the market itself is expanding or static. In a growing market, a company's sales might increase, but if competitors are growing faster, the business could actually be losing market share.

Market share

Market share is the proportion of a market's total sales that is earned by a particular company over a specified time period. It's calculated as:

$\text{Market share} = \frac{\text{sales of firm}}{\text{total market sales}} \times 100$

Increasing market share brings significant benefits:

• Enhanced brand recognition and loyalty
• Greater revenue potential
• Stronger competitive position
• Potential for economies of scale

Brand loyalty

Brand loyalty occurs when consumers become committed to a particular brand and make repeat purchases over time. Achieving sales once is good, but businesses really benefit when customers return again and again.

Building brand loyalty is a key marketing objective because loyal customers:

• Provide stable, predictable revenue
• Are less price-sensitive
• Recommend the brand to others
• Cost less to retain than new customers cost to acquire

Think of Apple customers who consistently buy iPhones, or shoppers who always choose Heinz beans over supermarket own-brand alternatives.

The value of setting marketing objectives

Setting clear marketing objectives provides several important benefits:

Target setting

Objectives give the business a clear focus and sense of direction. Marketing teams know exactly what they're working towards, whether that's achieving a certain market share or growing sales by a specific percentage.

Motivation

Clear objectives can be highly motivating for those responsible for achieving them. When marketing staff have specific, measurable targets, they can track progress and celebrate successes along the way.

Evaluation of performance

Marketing objectives allow businesses to evaluate how well their marketing activities are performing. However, objectives must be SMART to be effective:

• Specific – clearly defined and unambiguous
• Measurable – can be quantified and tracked
• Achievable – realistic given available resources
• Realistic – attainable in the current market conditions
• Time-based – have a clear deadline or timeframe

Key calculations

You need to be able to calculate several important marketing metrics:

Market share: $\text{Market share} = \frac{\text{sales of firm}}{\text{total market sales}} \times 100$

Sales growth: $\text{Sales growth} = \frac{\text{difference in sales}}{\text{earliest year}} \times 100$

Market growth: $\text{Market growth} = \frac{\text{difference in sales}}{\text{earliest year}} \times 100$

Market size: $\text{Market size} = \frac{\text{sales}}{\text{market share}} \times 100$

External and internal influences on marketing objectives

Marketing objectives don't exist in isolation – they're shaped by various factors both inside and outside the business.

Market and competition

Marketing objectives are likely to vary depending on market conditions:

For example, when a new competitor enters the market with innovative products, existing businesses might shift their objectives from growth to defending their current market position.