Marketing is perhaps the most important activity in a business because it has a direct effect on profitability and sales. Larger businesses will dedicate specific staff and departments for the purpose of marketing.
It is important to realise that marketing cannot be carried out in isolation from the rest of the business. For example:
The marketing section of a business needs to work closely with operations, research and development, finance and human resources to check their plans are possible.
Operations will need to use sales forecasts produced by the marketing department to plan their production schedules.
Sales forecasts will also be an important part of the budgets produced by the finance department, as well as the deployment of labour for the human resources department.
A research and development department will need to work very closely with the marketing department to understand the needs of the customers and to test outputs of the R&D section.
Roles In Marketing from eisens
- Perfect competition – Many firms, freedom of entry, homogeneous product, normal profit.
- Monopoly – One firm dominates the market, barriers to entry, possibly supernormal profit.
- Oligopoly – An industry dominated by a few firms, e.g. 5 firm concentration ratio of > 50%. Interdependence of firms
- Oligopoly diagram
- Collusive behaviour – firms seek to form agreement to increase prices.
- Monopolistic competition – Freedom of entry and exit, but firms have differentiated products. Likelihood of normal profits in the long term.
- Contestable markets – An industry with freedom of entry and exit, low sunk costs. The theory of contestability suggests the number of firms is not so important, but the threat of competition.
