What does the term marketing mean? Many people think of marketing only as selling and advertising. And no wonder, for every day we are bombarded with television commercials ,newspaper ads, direct mail campaigns, Internet pitches and sales calls. Although they are important, they are only two of many marketing functions and are often not the most important ones. Today, marketing must be understood not in the old sense of making a sale – telling and selling – but in the new sense of satisfying customer needs.
Selling occurs only after a product is produced. By contrast, marketing starts long before a company has product. Marketing is the homework that managers undertake to assess needs, measure their extent and intensity and determine whether a profitable opportunity exists. Marketing continues throughout the product’s life, trying to find new customers and keep current customers by improving product appeal and performance, learning from product sales results and managing repeat performance. Everyone knows something about ‘hot’ products.
When Sony designed Palpitation, when Monika introduced fashionable mobile phones, when The Body Shop introduced animal-cruelty-free cosmetics and toiletries, these manufacturers were swamped tit orders. Like Swatch and Smart Car, they were ‘right’ products offering new benefits; not ‘me-too’ products. Peter Trucker, a leading management thinker, has put it this way: ‘The aim of marketing is to make selling superfluous. The aim is to know and understand the customer so well that the product or service fits … And sells itself. 2 If the marketer does a good Job of identifying customer needs, develops products that provide superior value, distributes and promotes them effectively, these goods will sell very easily. This does not mean that selling and advertising are unimportant. Rather, it means that they are part of a larger marketing mix – a set of marketing tools that work together to affect the marketplace. We define marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.
To explain this definition, we examine the following important terms: needs, wants and demands; products and services; value, satisfaction and quality; exchange, transactions and relationships; and markets. Figure 1. 1 shows that these core marketing concepts are linked, with each concept building on the one fore it. The marketing process ‘Business has only two basic functions – marketing and innovation’, says the leading business guru, Peter Trucker. Such claims can seduce marketers into seeing themselves as superior to or independent of other business functions. That view is incorrect.
Marketing exists as part of an organization whose parts are interdependent. Trucker emphasizes the importance of selling and inventing what people want, rather than taking the production or sales concept of marketing and trying to sell what the producer wants. For an organization to survive, all its parts must work together for the good of all Strategy, marketing and planning Marketing is one part of the strategy of an organization where marketing of the strategic plan drives the company forward. The marketing process shows marketing’s role and activities in organizations and the forces influencing marketing strategy.
The marketing activities that most people manage concern a small part of a large organization with many other products and markets. For example, Anglo-Dutch Milliner has business units ranging from spreads and cooking products, marketing Ram, Flora Pro-active and others, to prestige fragrances including Very Valentine and House of Current. All share the company’s purpose: .. To serve consumers in a unique and effective way. Subsidiary to Milliner’s overall strategy are strategies for each business unit and each part of the world. Within those will be plans for ‘l Can’t Believe It’s Not Butter’ and Calvin Klein fragrances.
The Marketing Process continued Situation Analysis I Marketing Strategy I Marketing Mix Decisions I Implementation ; Control I l. Situation Analysis A thorough analysis of the situation in which the firm finds itself serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. In addition to identifying the customer needs, the firm must understand its own capabilities and the environment in which it is operating. The situation analysis thus can be viewed in terms an analysis of the external environment and an internal analysis of the firm itself.
The external environment can be described in terms of macro-environmental factors that broadly affect many firms, and micro-environmental factors closely related to the specific situation of the firm. The situation analysis should include past, present, and future aspects. It should include a history outlining how the situation evolved to its present state, and an analysis of trends in order to forecast where it is going. Good forecasting can reduce the chance of spending a year bringing a product to market only to find that the need no longer exists.
If the situation analysis reveals gaps between what consumers want and what currently is offered to them, then there may be opportunities to introduce products to better satisfy those consumers. Hence, the situation analysis should yield a summary of problems and opportunities. From this summary, the firm can match its own capabilities with the opportunities in order to satisfy customer needs better than the competition. There are several frameworks that can be used to add structure to the situation analysis: * 5 C Analysis – company, customers, competitors, collaborators, climate.
Company represents the internal situation; the other four cover aspects of the external situation * PEST analysis – for macro-environmental political, economic, societal, and technological factors. A PEST analysis can be used as the “climate” portion of the 5 C framework. * SOOT analysis – strengths, weaknesses, opportunities, and threats – for the internal and external situation. A SOOT analysis can be used to condense the situation analysis into a listing of the most relevant problems and opportunities and to assess how well the firm is equipped to deal with them. II.
Marketing Strategy Once the best opportunity to satisfy unfulfilled customer needs is identified, a strategic plan for pursuing the opportunity can be developed. Market research will provide specific market information that will permit the firm to select the target market segment and optimally position the offering within that segment. The result is a value proposition to the target market. The marketing strategy then involves: * Segmentation * Targeting (target market selection) * Positioning the product within the target market * Value proposition to the target market Ill.
Marketing Mix Decisions Detailed tactical decisions then are made for the controllable parameters of the marketing mix. The action items include: * Product development – specifying, designing, and producing the first units of the product. * Pricing decisions * Distribution contracts * Promotional campaign development ‘V. Implementation and Control At this point in the process, the marketing plan has been developed and the product as been launched. Given that few environments are static, the results of the marketing effort should be monitored closely. As the market changes, the marketing mix can be adjusted to accommodate the changes.
Often, small changes in consumer wants can addressed by changing the advertising message. As the changes become more significant, a product redesign or an entirely new product may be needed. The marketing process does not end with implementation – continual monitoring and adaptation is needed to fulfill customer needs consistently over the long-term. The cost and benefits of marketing orientations The Concept Market orientation has been defined in several ways: 00″We use the term “market orientation” to mean the implementation of the marketing concept” (Kohl and Gasworks, 1990, p. ). 00″Market orientation is the business culture that most effectively and efficiently creates superior value for customers” (Nearer and Slater, 1990, p. 10). 00″Market orientation as the degree to which the different management systems of an organization are designed in a market-oriented way” (Becker and Homburg, 1999, p. 20). From a conceptual point of view, three different perspectives can be extinguished (Becker and Homburg, 1999): behavioral perspective on market orientation: Kohl’ and Gasworks (1990) base their discussion on behavioral aspects, I. E. Hey put action as a central focus of market orientation. “Market orientation is the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it” (Kohl and Gasworks, 1990, p. 6). As such there is a clear focus on information-related behavior. For this perspective, measurement scales have been developed and tested tit positive results Reworks and Kohl 1993; Kohl, Gasworks and Kumar 1993). This perspective was later used by e. G. Eden and Dart (1994) and Attenuate-Gimp (1996).
Cultural perspective on market orientation: According to Nearer and Slater (1990, p. 21) “market orientation is the organization culture (I. E. , culture and climate, Deckhands and Webster 1989) that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and, thus, continuous superior performance for the business”. Having a marketing orientation means your company emphasizes the needs and wants of customers in all facets of operations. Products and services are developed specifically to meet the needs of your targeted customer products.
A marketing orientation is in contrast to a product orientation, which places the emphasis on product engineering and differentiation. Customer-Centric A major advantage with a marketing orientation is that your business is built on addressing the needs of those you serve. If customers want certain features or attributes in your products, you can more quickly learn and react if you have a hand on the pulse of the marketplace. Customer-centric organizations spend significant time researching to get the best understanding of what works and doesn’t work with existing offerings.
A market orientation means that you or an organization is more closely aligned in their thinking with the consumer/customer. Having a better understanding of what your customers wants are now is fine, but by developing a market orientation, where you can understand the needs and requirements of consumers, this helps in anticipating and developing new products or services which help to sustain favor with the customer as you are able to provide them with the things they want or need teeter than your competitors in the future. This helps to build relationships with customers, which cultivates their loyalty and protects against brand switching.
A market orientated approach moves away from a transactional approach where a business sells and gives little or no interest or attention to understanding the market place further. These businesses are likely to be one hit wonders at best or fail miserably. In kettle opinions the marketing orientation can give the following points : More Focused Production By making customer needs a primary focus, companies will more likely develop reduces that match up with the needs of the customers. This means customers will experience more satisfaction with the product, which ultimately increases the likelihood of repeat purchases and brand loyalty.
With an ongoing customer focus, companies can also make adjustments over time and will look to the market to guide product improvements and upgrades. Concentrated Strategy By adopting the marketing concept, companies have all functions aligned with the strategic vision of meeting the needs of customers. This helps define the role of employees more clearly. Marketers must perform diligent research to uncover needs ND convey messages that explain benefits. Production should focus on fine-tuning products to meet the needs of customers.
Support and service should have openness to customer feedback to report back to production and research. Company leadership must set the tone by making customers the priority. Marketing Advantages When companies have a good understanding of what the market needs or wants, they have better ability to market effectively to them. Marketers research the market well to understand not only what is needed, but how to convey messages that clarify how their products align with those needs. Familiarity with the market allows arresters to build emotionally impacting appeals into ads and generate more business.
Long-Term Profitability Consistently understanding and delivering what the marketplace wants leads to long- term profitability. Companies can turn one-time buyers into repeat customers, with an ultimate goal of developing many loyal customers. Loyal customers buy more frequently and in larger volumes. They are also less susceptible to competition and more willing to pay higher prices. All of these business benefits mean the company has much better ability to remain viable and successful as long as it retains the marketing concept.
The cost of marketing orientation : Risk of Underestimating the Market A successful approach to market orientation involves a systematic approach to researching customer behavior. Missing the mark in this process creates a system where a company is using ineffective data in its approach to reaching out to customers. Working with wrong data is often worse than working with no data at all. In short, a company that is very small, lacks research resources, or has high segmentation between its departments is at a disadvantage when it comes to establishing market orientation.
Risk of Underestimating the Customer A global marketplace has increased competitiveness across all consumer brands. The Internet has created a system whereby consumers can easily comparison shop, read peer reviews and access consumer reports at the click of the button. To effectively market to this new, highly informed consumer, an approach to market orientation must be flexible and must be quickly altered to meet the ever-changing thought processes and demands of today’s savvy shopper.
Companies that have established an approach to market orientation but fail to update it as needed run the risk of alienating their customers. Challenges of Quickly Responding to Market Changes Markets that rapidly change have Just as great an impact on a company’s market orientation strategy as educated consumers. New players entering or exiting the market, advances to existing products and an ever-changing cost of raw materials, products and services all impact market orientation. Following an established market orientation and failing to take new external factors into consideration can put a company at a disadvantage.
Dealing with Corporate Perceptions Understanding what the customer wants and needs is not enough to guarantee a market share in today’s economic environment. Branding and corporate perception has grown to be Just as important in the minds of consumers as price and quality. Building a marketing orientation concept around price and service alone puts a company at a disadvantage. All factors related to corporate perception must be calculated to ensure a solid, functioning and effective approach to market orientation.
Additional disadvantage can be hard to target campaigns at such a large Market *high costs as constant Market research needs to be carried outs so may lower profit margin or have high costs *not targeting a specialized sub-Market too hard to fulfill tots of consumers needs *hard to achieve product differentiation and stand out from competition *consumer wants can change quickly and may be hard to keep up with needs The cost of marketing orientation One of the fundamental problems that exists with marketing in most sectors, and in professional service firms more than most, is that it is relatively easy to acquire the trappings of marketing but very difficult to instill the substance. At its present stage of development within the professions, marketing is still very much at the trappings’ end of the spectrum.
The trappings of marketing in the professional service context ay be seen as the glossy brochures, the PR consultants, the new corporate identity, the advertising campaign and, in some cases, even the marketing manager or marketing assistant. The cost associated with all of these items may well be tens or even hundreds of thousands of pounds and will represent a sizable marketing budget for most Spas. Alone, the trappings of marketing are unlikely to have a significant impact upon the amount of business a SSP does or, more importantly, the way in which it does it. The substance of marketing may be seen as the implementation of the marketing concept; that is developing a market orientation hat is recognized, shared and constantly worked at by all the members of the firm.
The financial cost of achieving this ‘substance’ of marketing is likely to be less than that of achieving the trappings mentioned above. However, achieving a market orientation and developing a client focus throughout the firm is likely to take a lot longer to implement than the trappings. Perhaps more importantly, achieving a market orientation calls for organization-wide changes in structure, culture, management philosophy and the way in which the firm interacts with the marketplace it serves. The costs of developing a market-oriented firm are far more important in terms of professional and employee adaptation to the change involved rather than any financial costs that may be incurred.
If marketing is to evolve beyond the trappings stage, however, and the goal of becoming market-led, to which so many firms and professionals pay lip-service, is to become achievable, then the issues of implementation and the management of change in the professional service context need to move to the top of the management agenda. Task 2 ;Marketing Environment The Marketing Environment The marketing environment consists of actors and forces outside the organization hat affect management’s ability to build and maintain relationships with target customers. Environment offers both opportunities and threats. Marketing intelligence and research used to collect information about the environment. Marketing Environment Includes: Micromanagement: actors close to the company that affects its ability to serve its customers. Micromanagement: larger societal forces that affect the micromanagement. Considered to be beyond the control of the organization.
The Company’s Micromanagement Company’s Internal Environment: Areas inside a company Affects the marketing department’s planning strategies. All departments must “think consumer” and work together to provide superior customer value and satisfaction. Actors in the Micromanagement The Company’s Micromanagement Suppliers: Provide resources needed to produce goods and services. Important link in the “value delivery system. ” Most marketers treat suppliers like partners. Marketing Intermediaries: Help the company to promote, sell, and distribute its goods to final buyers Resellers Physical distribution firms Marketing services agencies Financial intermediaries Partnering With Intermediaries Customers: Five types of markets that purchase a company’s goods and services
Competitors: Those who serve a target market with products and services that are viewed by consumers as being reasonable substitutes Company must gain strategic advantage against these organizations Publics: Group that has an interest in or impact on an organization’s ability to achieve its objectives: The company and all of the other actors operate in a larger micromanagement of forces that shape opportunities and pose threats to the company. The Company’s Macro environment Demographic: The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Marketers track changing age and Emily structures, geographic population shifts, educational characteristics, and population diversity. The Seven U. S.
Generations Baby Boomers: 78 million born between 1946 and 1964 Account for 28% of population Earn more than half of all personal income Almost 25% belong to racial or ethnic minority Spend a lot on anti-aging products and services Are likely to postpone retirement Generation X 45 million born between 1965 and 1976 Defined by their shared experiences Increasing divorce rates more of their mothers employed First generation of latchkey kids Cynical of frivolous marketing pitches Care about the environment Prize experience, not acquisition Generation Y: 72 million born between 1977 and 1994 Have large amount of disposable income Comfortable with computer technology Tend to be impatient and “Now-oriented” Many product lines targeted at Gene Yes Economic Environment Changes in Income sass’s – consumption frenzy sass’s – “squeezed consumer” sass’s – value marketing Income Distribution Upper class Middle class Working class Underclass Natural Environment: Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Factors Impacting the Natural Environment Environmental Responsibility Technological Environment: Most dramatic force now shaping our destiny.
Technological Environment Changes rapidly. Creates new markets and opportunities. Challenge is to make practical, affordable products. Safety regulations result in higher research costs and longer time between conceptualization and introduction of product. Within the last ten years, which technological force has had the greatest impact on marketing? In what areas of marketing has this impact been seen? What technological force has impacted you the most? In what ways has this occurred? Political Environment: Cause-Related Marketing Cultural Environment The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors.
Cultural Environment: Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change. Cultural Environment: The institutions and other forces that affect a society basic values, perceptions, preference, and behaviors. Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change. Environmental Management Perspective * Taking a proactive approach to managing the environment by taking aggressive (rather than reactive) actions to affect the publics and forces in the marketing environment. This can be done by: * Hiring lobbyists * Running “advertorials” * Pressing lawsuits * Filing complaints * Forming agreements to control channels Task 3 Segmenting consumer markets There is no single way to segment a market. A marketer has to try different segmentation Variables, alone and in combination, to find the best way to view the market structure. Table 10. 1 outlines the major variables used in segmenting nonuser markets. Here we look at the major geographic, demographic, cryptographic and behavioral variables. Geographic segmentation calls for dividing the market into different geographical units, such as nations, states, regions, counties, cities or neighborhoods. A company may decide to operate in one or a few geographical areas, or to operate in all areas but pay attention to geographical differences in needs and wants.
International lifestyles are emerging, but there are counter forces that continue to shape markets. Cross-cultural research has defined five ‘mentality fields’ for cars in Europe. These show how much language demarcates common cultures and ways of life: 1. The north (Scandinavia). 2. The north-west (the United Kingdom, Iceland, and parts of Norway, Belgium and the Netherlands). 3. The centre (German mentality field extending to Switzerland and parts of Eastern Europe). 4. The west (the French-speaking area, including parts of Switzerland and Belgium). 5. The south (the Mediterranean, covering Spanish, Portuguese, Italian and Greek languages).
Self-expression is important to car buyers in all the geographical regions, but the similarity ends there. The western groups seek quality and practicality, the south ant value for money, while the north-western group sees their car in very personal terms. The differences influence the cars they buy and how they are equipped. Although all developed nations worry about the environment, they do so in different ways. In Italy, France and the I-J, motorists do not see their car as a source of pollution, while in Germany, demand for environmentally friendly cars is growing fast. Climatic differences lead to different lifestyles and eating habits.