Examples of marketing objectives include increasing sales or market share. Another example is building brand loyalty to encourage customers to continue buying products.
Marketing objectives allow the company to focus on the direction to be achieved in the future. Companies develop related strategies and allocate resources to achieve what is targeted in their marketing area. And the objectives they set must be aligned and support the objectives above them, namely business objectives.
Why are marketing objectives important?
Companies set marketing objectives to provide direction for their marketing area. Apart from giving direction and targets to be achieved, marketing objectives are essential for several reasons.
First, marketing objectives support and achieve overall business objectives. Companies break down business objectives into their functional areas, including marketing. Thus, setting marketing objectives is a prerequisite for achieving business objectives. For this reason, management will select targets and their realization from time to time and adapt them to changes in business objectives.
Second, management focuses on decision-making and marketing efforts by establishing objectives. They provide guidance on what needs to be done. Apart from that, they also guide companies to allocate and prioritize resources and marketing efforts. And finally, objectives allow companies to evaluate their marketing area to determine success or failure.
Third, setting objectives increases the chances of success in a marketing area. Objectives provide goals to be achieved in the future, allowing resources, decisions, and efforts to be focused on achieving them. In contrast, executing a marketing plan without knowing the goal is like driving a car without knowing the destination.
What are examples of marketing objectives?
Increasing market share from 15% to 20% within 3 years is an example of a marketing objective. Another example is growing sales by 10% in two years.
Good marketing objectives must meet specific, measurable, achievable, relevant, and time-bound (SMART) criteria. Specific means we can clearly identify it. Measurable means we can quantify it. Achievable means the objective is not impossible to achieve, considering the company’s resources and capabilities. Relevant means aligned with context, including competitive strategy, competitive environment, business objectives, and objectives in other functional areas. Time-bound means objectives must be set within a time frame (must be defined when we will achieve them).
There are several areas to be objective marketing. They include:
- Market share
- Brand loyalty
- Market size
Sales volume targets are essential for companies with significant fixed cost structures, such as car manufacturers. This is because they can lower costs by selling more to achieve higher economies of scale. Thus, by increasing sales, they spread their high fixed costs over more output, reducing the fixed costs per unit.
Lower unit costs will help these companies to increase profit margins. If they do that, they have more money to support other areas like research and development. More robust profits also provide value to shareholders because they can pay higher dividends.
Besides sales volume, some companies may focus on sales value. If the volume is measured by units sold, then the sales value is measured in money. In other words, sales value combines price and sales volume.
Increasing sales can be made in several ways. First, the company deepens market penetration, growing sales for the current product in the existing market. This is achieved through more intense promotion. For example, a company lowers selling prices to increase sales volume at a higher percentage. Thus, higher volume compensates for lower unit margins.
Second, the company develops a product and sells it to the current market. For example, they launched a product to complement the existing one.
Third, the company develops the market. They sell products to new markets. For example, they target a new segment. Or, they sell products to other geographic areas, such as overseas.
Market development focuses on the market segments currently served by the company. For example, market development can be done by finding new market segments and selling products to these segments. Or, the company can expand the market by selling to international markets.
Take the international market as an example. In the first year, companies might focus on a single destination country to sell their products in, say, France. Then, if sales are steady there, the company targets surrounding markets such as Germany or the Eurozone as a whole.
Developing a market is closely related to increasing sales, where the first is the way to reach the second.
Market share reflects the company’s market position in the industry. We say a company is the market leader if it has the largest market share. The company has a strong position relative to its competitors.
A strong market position is important because, among other reasons, it allows the company to have stronger bargaining power over stakeholders, such as suppliers and customers. For example, suppliers often prefer to deal with market leaders and are willing to provide discounts to secure a strong partnership over the long term.
The market share objective is also closely related to the sales objective. Companies can only increase market share if their sales increase more than the industry average. Without it, the market share will not grow.
Brand loyalty allows the company to secure future cash flow. In addition, loyalty drives existing customers to continue buying products from the company, including its new products.
Loyalty is essential for a long-term business because it is less expensive than finding new customers. Acquiring new customers can cost more, such as promotion. Conversely, promotions will be minimal when existing customers are loyal because they will try to find information on their own. As a result, companies don’t need high-cost promotions to entice them to buy back. For this reason, loyalty is essential to achieve high-profit margins.
Then, loyalty also can reduce costs for acquiring new customers. Loyal customers are likely to give positive reviews and are willing to recommend products to colleagues or people around them. Thus, the company can sell to new customers at no additional cost.
The company may view its existing value proposition as unattractive because a competitor offers a better one. This situation requires companies to rethink their marketing strategy. They then develop objectives for changing the brand image and repositioning the product in the market.
For example, a clothing manufacturer is repositioning their product from the mass market to a specific need. They are retargeting their market segment, focusing on the millennial consumer segment. They then adapt their product and competitive strategy to effectively target that segment.
While market development focuses on the segments currently served, market size focuses on the industry in which the company operates. Companies may be interested in expanding market size. They see the market has grown slowly, and it is only possible to increase market share by causing more intense competition. To avoid fierce competition – and therefore price competition, which is harmful to all players in the industry – large players are often interested in increasing market size.
For example, a leader in an industry might sponsor research on product efficacy. This effort will increase sales in the overall market by attracting more new customers, including segments that have yet to be targeted.
Another example is what watch manufacturers do. Instead of marketing their products as time markers, they developed a paradigm innovation by marketing watches as accessories and reflecting fashion statements. Therefore, it is not surprising that today they are also used as a status symbol.
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