MARKETING MANAGEMENT

While a product could represent many different things, a good, however, is a tangible object that can be seen and touched. A service, while a good and in sharp contrast to it, represents an intangible product that may involve human or mechanical effort in its delivery. Services are being consumed increasingly by personal and organisational consumers and constitute a very important part of the economics of developed and developing countries. More people are employed in service jobs than in those that produce goods. Since the later part of the 19th century, marketing has gradually evolved through various marketing orientations. These stages in marketing evolution present a generalised picture and a sufficiently significant number of companies have adopted the most modern marketing concept or philosophy.
The Production Concept
This concept, viewed as one of the oldest of managerial orientations, typically aimed at achieving as high an output as possible. This philosophy assumed that customers would
be more interested in acquiring conveniently available, reasonably priced, and well-made
products. Keeping in view the market behaviour prevailing in times when customers did
not have much choice, it was a sound approach. The focus of managers, generally
having backgrounds in manufacturing and engineering, was to concentrate on achieving
increasingly higher efficiency in production, lower production costs, and more intensive
distribution. Even today, this approach seems to be quite sensible in relatively
underdeveloped and developing economies because customers are more interested in
owning a product and not overly concerned about finer features and aesthetic appeal. In
general, one important condition seems to be favourable to adopt production orientation:
when the masses look for a cheaper product and demand far exceeds production. In
India, The National Textile Corporation (NTC) and all its subsidiaries are sticking to this
philosophy while producing textiles for the huge, poverty-stricken population in this country.
Their philosophy and positioning is reflected in their ad, “Clothiers of the nation with
affordable prices.” In the global scenario, for nearly three decades Intel Corporation
focused on achieving increasingly high production output of its successive generations of
processors so as to bring down the prices of each improved version. The production
concept is unlikely to get discarded for a very long time to come, because there would
always be products and populations of such a nature that some companies would feel
comfortable with this philosophy.
The Selling Concept
Sales concept seems to be based on a lurking apprehension that customers will not buy the product in sufficient quantities unless aggressively pressurised. The selling concept was the major means of increasing sales and profits during 1920s to 1950s in the developed countries of that period. Companies believed that the most important marketing activities were personal selling, advertising, and distribution. Selling concept is geared towards converting existing product(s) into cash rather than first finding and then satisfying customer needs. Sales concept is often observed in practice when companies show heavy reliance on their promotional capabilities based on “hard sell” approach. It is obvious that if a company’s products do not match the changing tastes and requirements of customers, with many alternative choices available, managers might be inclined to go for aggressive promotional efforts to sell enough quantities. In his book, The End of Marketing as We Know It, Sergio Zyman writes that the purpose of marketing is to sell more stuff to more people more often for more money in order to make more profit. Of late, this has been happening in case of some Credit Cards in our country. Generally,
“hard sell” is often seen in case of products or services that people buy without giving much thought to the matter, such as non-essential goods, and tend to postpone such purchases. With ever intensifying competition, products becoming more standardised without any meaningful differentiation i.e., commoditization, heavy promotional effortsin all possible manners are bound to remain the practice, in order to grab more share of the customers’ purse. The consequences of “hard sell” might harm the customer base to the extent that, in some cases, they might even bad-mouth the product if the product fails to match up to their expectations.
The Marketing Concept
After World War II, the variety of products increased, people had more discretionary income, and could afford to be selective and buy only those products that more precisely met their changing needs and wants. However, these needs were not immediately obvious. Sometime during the mid-1950s, there was growing recognition among American business people that merely efficient production and extensive promotion, including hard selling, did not guarantee that customers would buy products. With the passage of time, more knowledge, and experience, customers increasingly seemed unwilling to be persuaded. More and more companies found that determining what customers wanted was a must before making a product, rather than producing products first and then persuading them to buy. The key questions became:
1. What do customers really want?
2. Can we develop it while they still want?
3. How can we keep our customers satisfied?
Thus, the marketing concept era began. Marketing concept proposes that an organisation
should focus on customer needs and wants, coordinate its efforts, and endeavour to
accomplish organisational goals. Geraldine E Williams reported that the CEO of Nike said, “For years we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product.” The major focus of all sets of organisational activities should be satisfying customer needs. This requires carefully listening to customers as a student listens to a teacher. Stanley F Slater and John C Narver reported that there is positive relationship between market orientation and performance.
Sometimes, philosophies that sound quite reasonable and appear attractive on paper, are difficult to put into practice. To embrace the marketing concept as the guiding philosophy, the concerned firm must accept certain general conditions and manage some problems.
wide responsiveness to it. It means establishing a reliable information system to learn about real needs of customers and design the right need satisfying solutions. Setting up an information system can usually be an expensive proposition and requires committing money and time to its development and maintenance. Company-wide coordination may require restructuring the internal operations and overall objectives in case of one or more departments. Appreciating the critical role of marketing, the head of marketing has to be part of the top management team. Acceptance and implementation of marketing concept demands support of top management and other managers and staff. To inculcate a customer-orientation culture, it is necessary that employees at all levels in the organisation should understand the value of the customer and the importance of the customer satisfaction. Obviously, the internal customers (company employees at all levels) themselves should be satisfied and motivated to promote an organisation-wide culture that puts high value on creating a satisfied customer. For this, the company has to ensure
an appropriate work environment and take care of their legitimate needs. Benson P. Shapiro is of the opinion that a company is customer focused if the answers are “yes” to the four critical questions: Alan Grant and Leonard Schlesinger are of the view that market-orientation requires
organisation-wide generation of market intelligence across departments, and organisation
Customer-oriented planning and implementations
It should be the sole aim of all employees, irrespective of their department or functional area, to satisfy customers’ needs. It would require carefully segmenting the market on the basis of the right criteria, targeting suitable segment(s), learning about customer needs and wants, analysing and spotting the right opportunities and matching them with
Relationship Marketing
Companies in developed countries and many businesses in developing countries aim to satisfy customer needs and build lasting relationships. The issue focuses on reliability and trust between customer and organisation. As a result of this customer focus, a whole new subject, customer relationship management is now studied in marketing courses. According to Jagdish N. Sheth and Rajendra Sisodia, the term ‘relationship marketing’ refers to long-term and mutually beneficial arrangements wherein both buyer and seller focus on value enhancement through the creation of more satisfying exchanges. This approach attempts to transcend the simple purchase exchange process with customers to make more meaningful and richer contacts by providing a more holistic, personalized purchase, and use or consumption experience to create stronger ties.
The new approaches to marketing such as experiential, permission, and one-to-one marketing can all be seen as means of creating stronger relationships with customers
The emphasis is on developing long-term bonds with customers by making them feel good about how the firm interacts or does business with them by giving them some kind
of personal connection to the company. Real relationship-marketing programme is much
more than the use of database marketing to target customers more precisely. Its purpose
is that each customer must feel she/he has received something in return for being a
member of the partnership. Firms have found that Internet is an inexpensive, efficient
and more productive means to extend a firm’s customer services. Internet permits firms
to ask consumers if they permit the company to send them targeted e-mail ads, promotions,
or messages, before actually doing so. Some airlines, hotel chains, credit card businesses,
and big retailers, etc., use relationship marketing techniques by awarding points to
committed customers that can be used to obtain additional goods or services from the
concerned company. To put it differently, relationship marketing is all about building trust
between the company and its customers and keeping promises. These factors increasingly
strengthen the customer dependence on the organisation, as a result of which the
customer’s confidence grows, while the company better understands the customer and
her/his needs and wants. Ultimately, this helps in cementing the relationship and encourages cooperative problem solving.
Relationship marketing is based on the principle that current customers are the key to long-term business success. According to Frederick F. Reichheld, the importance of customer retention can be judged by observing some of the following benefits it provides
Acquiring New Customers vs. Retaining Old Customers
But when new entrants were actively wooing our customers, we recognised the need to
focus on customer retention. We formed the Customer Asset Management (CAM) team, the business division parallel to our sales business unit. This team has a singleminded focus on retention activities with a direct say in all aspects of the business. We also started to focus on attracting the right quality of customers. Towards this, we fine-tuned our acquisition strategy. We are exploring alternative channels for selling. It is important for a service brand to create differentiation, which is an experiential sum of all its interactions with the customer.
The total experience is our ability to deliver advanced products first in the market, providing
an impeccable network quality and rounding off the product experience with a memorable
service experience every time the customer interacts with us.
(Krishna Angara, Executive Vice President, BPL Mobiles, Business Standard,
June 19, 2005).
According to Steve Schriver, research indicates that consumers are less loyal now than
in the past due to the following reasons:
1. The abundance of choice.
2. Availability of information.
3. Customers ask, “What have you done for me lately?”
4. Most products/services appear to be similar – nothing stands out.
5. Customers’ financial problems reduce loyalty.
6. Time scarcity (not enough time to be loyal).
These forces lead to consumer defections, complaints, cynicism, decreased affiliation,
greater price sensitivity, and a tendency to carry on lawsuits.
The Societal Marketing Concept
Marketing concept was accepted widely among companies in developed and some developing countries and continued to evolve and take on new meanings. Not long after this, criticism started about the nature of its social responsibility. The emphasis shifted to how marketing affected society as a whole in an age of depleting and increasingly scarce resources, environmental deterioration, etc. It was good enough to produce what customers
needed or wanted, and for achieving organisational objectives, but in certain cases the
concept could be in conflict with customers’ and society’s best long-run interests. Societal
marketing concept is a management philosophy that takes into account the welfare of
society, the organisation, and its customers.
Adoption of this concept requires that marketing decisions be made in an ethical and
socially responsible manner. Companies must pay attention not only to the short-term
needs of customers but also to their long-term well being. This includes, for instance,
excess fat content in ready-to-eat foods, toxic wastes, and environmental issues. The need is to strike a balance between the interest of customers, the company itself, and the society in which operations are conducted. Some responsible firms have started using recyclable packaging materials and products that do not harm the environment. Among the marketing tasks, demarketing is an approach that reflects the societal marketing
philosophy.
Many companies encounter several hurdles in adopting the marketing concept. For some
firms, it is simply too difficult to understand the underlying philosophy and they fail to implement it. Other companies face a conflict between short-term and long-term objectives
and have no inclination to sacrifice short-term gains for the sake of customer satisfaction,
simply because the customer is not the major priority of top management.
Holistic Marketing Approach
There have been major changes in almost every sphere of human activity over the last decade, like implication being that this requires fresh marketing thinking, a fresh approach to business, and this calls for a holistic marketing approach. This new thinking relies upon marketing research to define market segments, their size, and their needs. To more completely satisfy those needs, marketers need to have a more complete and cohesive approach to internal marketing, targeted marketing, relationship marketing, be visibly socially responsible, and make decisions about the controllable elements of the marketing mix.
Marketing Mix
Marketing mix is a major concept in modern marketing and involves practically everything
that a marketing company can use to influence consumer perceptions favourably towards its products or services so that consumer and organisational objectives are attained. Marketing mix is a model of crafting and implementing marketing strategy. Prof. Neil H. Borden first used the term “marketing mix” in 1949 to include in the marketing process factors such as distribution, advertising, personal selling, and pricing. Borden claims that the phrase came to him while reading James Culliton’s description of the activities of a
business executive:
(An executive) “a mixer of ingredients, who sometimes follows a recipe as he goes along, sometimes adapts a recipe to the ingredients immediately available, and sometimes experiments with or invents ingredients no one else has tried.” [Wikipedia: James Culliton, The Management of Marketing Costs, Research Division, Harvard University (1948)]. There are virtually dozens of marketing mix tools. However, Prof. E. Jerome McCarthy classified the “Marketing Mix Variables” in terms of 4 Ps: Product, Price, Place (distribution) and Promotion. These 4 Ps represent the tactical controllable factors and
Product (Customer Benefit)
In the marketing mix, the product or service is the most important element. There is an
old saying in marketing: “Without a good product, you have nothing.” Product is directly related to satisfying the customer needs and wants in the target market. Customers acquire products for the singular reason that they are perceived as the means to satisfying their needs and wants. According to Philip Kotler, “A products anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want.” In effect, according to this definition products include physical products, services, persons, places, organisations and ideas. Various product attributes such as quality, variety, design, brand, packaging, services, and warranties, etc., can be manipulateddepending on what the target market wants. This may ultimately affect the product
quality that can be kept high or low. Marketers also develop other product aspects such
as service, packaging, labelling, instruction manual, warranties, and after sales service.
Customers always look for new and improved things, which is why marketers should
improve existing products, develop new ones, and discontinue old ones that are no longer
needed or wanted by customers.
Promotion (Marketing Communications)
Promotion is a key element of marketing programme and is concerned with effectively
and efficiently communicating the decisions of marketing strategy, to favourably influence
target customers’ perceptions to facilitate exchange between the marketer and the customer that may satisfy the objectives of both customers and the company. In reality, everything that a company does has the potential to communicate something to the target customers. For instance, the price of a product has the potential to communicate to target customers a certain image of the product. For example, a low-priced designer dress is unlikely to attract high-profit, well-heeled target customers, while less affluent buyers may find the designs too avant garde for comfort. The major elements of promotion mix include advertising, personal selling, sales promotion, direct marketing, and publicity. A company’s promotion efforts are the only controllable means to create awareness among publics about itself, the products and services it offers, their features, and influence their attitudes favourably. It is critically important for marketing managers to create a strong marketing mix, because any weak element not complementing others can adversely affect the chances of a product’s success in the market-place. All the marketing mix elements should complement others to communicate effectively with target market. The best products and high class promotional efforts would not sell it if they products are not available at distribution outlets.
Distribution (Customer Convenience)
Decisions with respect to distribution channel focus on making the product available in adequate quantities at places where customers are normally expected to shop for them to satisfy their needs. The aim of the management is also to keep the physical distribution costs (that would include inventory, transportation, and storage) as low as possible. Depending on the nature of the product, marketing management decides to put into place an exclusive, selective, or intensive network of distribution, while selecting the appropriate dealers or wholesalers. The right choice of these factors can give a company some competitive advantage. For example, a low-priced product consumed regularly on an ongoing basis should be available at as many outlets as possible (intensive distribution) otherwise consumers would buy any other substitutes that are more conveniently available. On the other hand, for purchasing products such as CTV, washing machine, computer, or other similar durable items, consumers don’t mind visiting some selected dealers (selective distribution), and for high-end, very expensive items such as Mercedes Benz cars, expensive and exclusive jewellery status watches and accessories, etc., customers are quite willing to visit exclusive dealerships, even if there are just one or two in the city (exclusive distribution).
Price (Customer Cost)
Pricing decisions are almost always made in consultation with marketing management. Price is the only marketing mix variable that can be altered quickly. Price variable such as dealer price, retail price, discounts, allowances, credit terms, etc., directly influence the development of marketing strategy, as price is a major factor that influences the assessment of value obtained by customers. Price can be kept as high or low, or at any level in between these two extremes. Too high would be the point at which any meaningful sales are not possible because the target customers won’t accept the product, and too low would be the point at which company would incur losses instead of profits. Price is said to be an important competitive tool, and intense price competition between rival companies often culminates in a price war and the contestants generally end up gaining nothing. The customers, however, enjoy the benefit of low prices till such time that good sense prevails between contestants and prices are brought back to normal. In case of certain products, price becomes the indicator of product quality and helps impart an
image to the product.
DEFINING AND DELIVERING CUSTOMER VALUE
AND SATISFACTION
In developed and developing economies, consumers have several products or brands to
choose from to satisfy a given need or a group of needs. Much depends on what consumers’ perceptions are about the value that different products or services are expected to deliver. The sources that build customer expectations include experience with products, friends, family members, neighbours, associates, consumer reports, and marketing communications. Customer value is the ratio of perceived benefits and costs that the customer has to incur in acquiring that product or service. The emphasis here is on customers’ perceptions and not the accurate, objective evaluation of value and costs, as customers often do not judge values and costs accurately. Value indicates that a certain product or service is perceived as having the kinds and amounts of benefits (economic, functional, and emotional) that customers expect from that product or service at a certain cost (monetary costs, time costs, psychic, and energy costs). Thus, value is primarily determined by a combination of quality, service, and cost. The value to the
customer can be made favourable either by increasing the total benefits at the same cost, maintaining the same benefit level and decreasing the cost, or increasing both the benefits and the costs, but the proportion of benefits is higher than the increase in costs



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