4.1. The role of marketing

4.1. The role of marketing

Marketing and its relationship with other business functions

‘Marketing is the management process which identifies, anticipates and supplies customer requirements efficiently and profitably’.

This definition emphasises the wide scope of marketing, ranging from initial identification of customer needs by means of research, right through to eventual, profitable satisfaction of those needs.

Kotler emphasised the importance of marketing as getting ‘the right product or service to the customer, at the right price, at the right time’.

Products, goods and services: a note on terminology

A product is something that is offered to a market:

(a) Soap powder is an example of a fast moving consumer good (FMCG). It is a physical product that is bought often

(b) Durable goods are purchased less often and tend to be more expensive than FMCGs. Televisions, cars and computers are examples of durable goods.

(c) A haircut is also a type of product – it is an example of a service product.

Broadly speaking, the word product can refer to physical goods or services. FMCGs and durable goods combined are sometimes referred to as consumer goods.

Strategic and tactical marketing

a. Strategic marketing is tied in with corporate strategy, by identifying which products and markets the organisation wishes to operate in. For example, a fashion retailer decides to open in the capital city of a country it had not operated in before as it believes there are new, wealthy customers.

b. Tactical marketing is focused more on the short-term and on particular elements of the marketing mix. For example, end of season sale to make way for new stock.

Pull vs Pull Marketing

Traditionally, marketing activities focus on pushing goods out to resellers and consumers. Product promotion is by the final seller in the value chain.

A pull approach aims to produce a product that consumer demand will pull into retail outlets. Product promotion is shared between the manufacturer and the final seller.

Summary

Marketing has three dimensions:

· It is a culture. The marketing concept is to focus on consumer needs

· It involves strategy. A company must select the markets it intends to sell to and the products or services it will sell. These selections are strategic decisions

· It involves tactics. Marketing tactics can be considered the 7Ps of the marketing mix.

Relationship to the other business functions

Figure 1 shows Kotler’s concept of marketing not as a subsidiary function of selling and not as an equal with the other functional areas of management but as the integrative function within management. According to Kotler,

The differences between marketing of goods and marketing of services

Goods are tangible items. Consumers through the ability to see the product can make quick judgments with regard to price and quality. Marketing services is much more difficult due to its intangible nature. Instead of quality being conformity to a set of specifications – service quality is determined by customers. Quality is frequently determined in a comparison context. Price acts as the sole indicator of service quality when other quality indicators are absent.

Services and service marketing

Services have a different nature to goods and therefore the marketing of services presents a number of different challenges. The following characteristics of services distinguish them from goods:

1) Intangibility refers to the lack of substance which is involved with service delivery. Unlike goods there is no substantial material or physical aspects to a service – no taste, feel, visible presence and so on.

Dealing with intangibility may involve the following:

a) Increasing the level of tangibility: use of physical or conceptual representations/illustrations to make the customer feel more confident as to what it is that the service is delivering.

b) Focusing the attention of the customer on the principal benefits of consumption: communicating the benefits of purchasing the service so that the customer visualizes its use. Promotion and sales material could provide images or records of previous customers’ experience.

c) Differentiating the service ad reputation-building: enhancing perceptions of customer service and customer value by offering excellence in the delivery of the service. This reputation can be attached to brands, which must then be managed to secure and enhance their market position.

2) Inseparability: services often cannot be separated off from the provider. Consequently increasing importance is attached to the need to instill values of quality, reliability and to generate a service ethic in customer-facing staff. This points to the need for excellence and customer orientation and the need to invest in high quality people and high quality training.

3) Heterogeneity: many services face the problem of maintaining consistency in the standard of output. In terms of marketing policy heterogeneity highlights the need to develop and maintain processes for consistency of quality control with clear and objective quality measures; consistency of customer service and customer care; effective staff selection, training and motivation in customer care; and monitoring service levels and customer perceptions of service delivery.

4) Perishability: services cannot be stored – they are innately perishable. Seats on a bus or the services of a doctor exist only for periods of time. If they are not consumed, they perish. They cannot be used later. They cannot be produced in advance to allow for peaks in demand. Policies must seek to smooth out fluctuations in supply/demand relationships. Examples include: using price variations to encourage off-peak demand; using promotions to stimulate off-peak demand and using flexible staffing methods to cover fluctuations in demand.

5) Ownership: services do not result in a transfer of property. The purchase of a service only gives the customer access to or the right to use a facility, not ownership. This may lessen the perceived customer value of a service. There are two basic approaches to addressing this problem: promote the advantages of ownership and make available a tangible symbol or representation of ownership such as a certificate.

Market orientation versus product orientation

Marketing theory has undergone several changes since the birth of capitalism. There are several marketing terms that describe the primary focus of a company's energy and theories behind a certain type of business model. Businesses tend to develop new products based on either a marketing orientated approach or a product orientated approach.

• A marketing orientated approach means a business reacts to what customers want. The decisions taken are based around information about customers’ needs and wants, rather than what the business thinks is right for the customer. Most successful businesses take a market-orientated approach.

• A product orientated approach means the business develops products based on what it is good at making or doing, rather than what a customer wants. This approach is usually criticised because it often leads to unsuccessful products - particularly in well-established markets.

Most markets are moving towards a more market-orientated approach because customers have become more knowledgeable and require more variety and better quality. To compete, businesses need to be more sensitive to their customers needs otherwise they will lose sales to their rivals.

On the other hand some products are argued to create a need or want in the customer, especially products with a very high technological content. Mobile phones have moved from being a business accessory to being a big consumer brand item, with many additional gadgets, such as pictures, video and Internet access. Innovations create the need rather than the customer being able to second-guess how new technology is going to develop.

Source: https://www.tutor2u.net/business/blog/qa-explain-how-a-marketing-orientation-differs-from-a-production-orientatio

Some businesses produce the ………………… first and then try to find a ………………… for it. This is known as being ………………… …………………. This is not ………………… today. Product oriented ………………… often produce basic ………………… required for living, such as agricultural tools and fresh …………………. These products may not have their own name or brand and are general products that consumers need to buy. The manufacturer and ………………… are mainly concerned with the ………………… and ………………… of the product. Sometimes when new ………………… are being developed, this is done without first investigating ………………… markets. People may not want this product until it has been ………………… and advertising has persuaded them to buy it.

Businesses whose markets are national or ………………… cannot afford to produce products and hope that they will sell, without first carrying out market ………………… to find out if the customers will want the product. This is called being market oriented and it means that the business must have a marketing …………………. The business has to identify the wants and desires of …………………, both now and in the …………………, in order to produce the right goods which will sell well and make a good ………………… for the business.

Market oriented businesses are better able to survey and be successful because they are usually more prepared for ………………… in customer tastes. They are able to take advantage of new market ………………… which may arise. New products are ………………… with more confidence when customer needs have been ………………… before the product is introduced into the ……………………

Difference between commercial marketing and social marketing

Marketing is a responsibility of management through which knowledge of customers is gained and the organization's capabilities are deployed to serve these customers. In terms of business marketing, identifying and satisfying customers' needs earns the organization a financial profit. In contrast, social marketing leads to societal well-being.

Social Marketing

The intent of social marketing is the achievement of specific behavioral goals for the good of society. For example, social marketing can encourage people to avoid smoking in public areas or lead individuals to drive at or below posted speed limits. By encouraging society to avoid demerit goods (smoking in public areas) or promoting merit goods (following speed limits), social marketing promotes the well-being of society.

Business Marketing

The American Marketing Association describes marketing as an "activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large." In short, business marketing is the process by which customer requirements are identified and satisfied by an organization's services or products to earn a profit. It is by this process that a firm gains a competitive advantage over another business.

Source - http://smallbusiness.chron.com/main-difference-between-social-marketing-business-marketing-23967.html

Similarities and Differences

Similarities between commercial marketing and social marketing

• A customer orientation is critical.
• Exchange theory is fundamental.
• Market research is used throughout the process.
• Audiences are segmented.
• The proper target market is selected.
• All 4 P’s are considered.
• Results are measured and evaluated and used for improvement.

Social marketing is more difficult than commercial marketing.

What is market share (http://www.quickmba.com/marketing/market-share/)

Task 4: Google Chrome would have a 'working monopoly' position in the Desktop web browser market.

(a) As of February 2019, does it have the same proportion of the market share? See

https://www.w3counter.com/globalstats.php

(c) Account for the difference in how market share is shared between the wireless carriers market and the public-cloud market

(d) Interpret the following graphics in terms of implications for firms and markets

Task 5: Why is the pursuit of market share typically seen to be such an important marketing objective? In what circumstances would you recommend to an organisation that market share or market share increases would be an inappropriate objective?

Kotler's Model of Competitive Marketing Strategies

The marketing objectives of for-profit organizations and non-profit organizations - https://www.mainstreethost.com/blog/for-profit-vs-nonprofit-business-marketing/

How marketing strategies evolve as a response to changes in customer preferences

Influences on consumer buying

1: Social factors: relate to the social groupings a consumer belongs to or aspires to, and trends in society which influences buying patterns. He learning of gender-related, consumer and occupational roles are examples of socialization.

Reference groups influence a buying decision by making the individual aware of a product or brand, allowing them to compare their attitude with that of a group, encouraging the individual to adopt an attitude consistent with the group, and then reinforcing and legitimizing the individual’s decision to conform.

2: Cultural factors: Culture comprises the values, attitudes and beliefs in the pattern of life adopted by people that help them integrate and communicate as members of society. Culture comprises cultural artifacts, lifestyles and so on.

3: Personal factors: include such things as age, stage of family and life cycle, occupation, economic circumstances and lifestyle.

4: Psychological factors: The process of buyer behaviour is influenced by four psychological factors: motivation, perception, learning and beliefs & attitudes.

a. Motivation is an inner state that energizes, activates, or moves, that directs or channels.

b. Perception is the process whereby people select, organize and interpret sensory stimuli into a meaningful and coherent picture. The way consumers view an object may vary according to their past experience, expectation, needs, interests, attitudes and beliefs.

c. Learning concerns the process whereby an individual’s behaviour changes as a result of their experience.

d. A belief is a descriptive thought that a person holds about something. The brand beliefs that people have about products make up the brand images of those products. At attitude describes a person’s enduring favourable or unfavourble cognitive evaluations, emotional feelings and action tendencies toward some object or idea. Attitudes lead people to behave in a fairly consistent way towards similar objects. Attitudes tend to settle into a consistent pattern – to change one attitude may entail major changes to other attitudes.

Report Shows Marketers Shifting Strategies to Meet Customer Preferences by Industry

There are many different stages and components of marketing, but what customer demands change what is considered important from industry to industry, according to a new summary report.

Digital marketing solutions provider Lyris, Inc wrote the report, “Mind the Marketing Gap: Sizing up Marketer vs. Consumer Perceptions by Industry,” based on results of two surveys conducted by the Economist Intelligence Unit in March 2013. The respondents — 409 consumers and 257 marketers — either worked for or were asked about six different industries: automotive, clothing, banking, travel, media and entertainment.

Customers Want Personalization, but Also Privacy

Not all customers are the same; they have different likes and dislikes and marketing should reflect that. According to the report, while marketers still use traditional forms of marketing — such as mass ad campaigns in magazines — more companies are using digital channels such as social media and email. Marketers find these channels especially useful to meet customer demand due to their interactive and personalized nature.

Even though customers want some sort of personalization when it comes to advertising and marketing, they also see problems with this technique. Seventy five percent of consumers surveyed found that “attempts at personalization are superficial” and 63 percent said they receive too many personalized messages and they've started to look the same.

Due to these responses many marketers have tried to improve personalization using analytics and other data such as a person’s social or offline behaviour. Although this kind of in-depth, intrusive marketing carries risks as well. Many consumers feel that their privacy is at risk as they often don't know exactly what information is being collected or how it’s used.

Marketing Break Down by Industry

Automotive and Banking

In the auto industry more marketers want a well-rounded picture of their customers as they tend to target consumer segment analytics instead of individual reports. Among those surveyed, 50 percent said they focus on "expanding and diversifying" their customer base with its promotional offers. Popular ways to promote a business or these special offers are social media, blogs and personal referrals.

Despite everyone needing a bank, the organization's marketing tactics aren’t up to par with other industries. According to the report, most bank marketers are working on regaining a sense of trust with their customers as 42 percent of marketing executives said that customer retention was a top priority. One of the biggest obstacles for bank marketers — at 44 percent of respondents — is a lack of Big Data knowledge, which impede the move from general personalization strategies to more individualized offers.

Media and Clothing

For those in the media industry the goal isn't to just improve the customer experience, or build a larger customer base; 45 percent want to enter "new markets" and expand what the company can do since they face a lot of competition. Media marketers, despite not having the customer as one of their top goals, finds that customer insight is very important and that online channels need to be used to build brand awareness, sales and customer loyalty. Seventy four percent of those surveyed said that online channels were important while 38 percent mentioned that email was one of their preferred ways to communicate.

As for the retail sector, this is where most customers tend to find these personalized messages irrelevant or uninteresting. Sixty six percent of retail consumers found personalized messages to be superficial and 71 percent said they were sent too many of these messages for them to really be personal. Although, 75 percent mentioned they look for coupons and other deals through "branded channels over third party-sites."

The report also notes that the retail industry has more of a traditional marketing approach where most companies still use offline channels, instead of combining these efforts with online channels. According to the report, these businesses don’t see online channels as an inaugural part of the purchasing process — even though many of these brands rely on customer reviews and opinions, many of which come from websites.

Source - http://www.cmswire.com/cms/customer-experience/report-shows-marketers-shifting-strategies-to-meet-customer-preferences-by-industry-021906.php

Task 7: Note 5 deductions you can make about digital marketing from observing the following graphics

How innovation, ethical considerations and cultural differences may influence marketing practices and strategies in an organization

Ethics of Marketing

Corporate social responsibility and social marketing

Corporate Social responsibility involves an organization accepting that it is part of society and, as such, is accountable to society for the consequences of its actions. Socially responsible firms believe that they have an obligation to maximize the positive impact they have on their stakeholders.

Social responsibility, ethics and the law

Social responsibility is closely related to ethics. However, ethics is just one aspect of social responsibility – ethics also concerns personal moral principles and values. Business ethics is similar to personal ethics, but relate to principles and standards that govern the behaviour of business organization. Ethical business decisions are ones that ‘feel right’ and may be judged as being ‘right’ or ‘wrong’ in the eyes of those outside the organization.

Ethics are concerned with judgments of society that have no enforceable impact on the organization. On the other hand, laws are rules that can actually be upheld in court. Behaviour which is not subject to legal penalties may still be unethical and socially irresponsible.

We can classify marketing decisions according to ethics and legality in four different ways:

· Ethical and legal (printing on recycled paper)

· Unethical and legal (targeting young adults in an alcopops advertising campaign)

· Ethical but illegal (publishing stolen but revealing documents about mis-selling

· Unethical and illegal (passing off cheap imitation goods as designer brands

Ethical Marketing

Ethical issues usually revolve around safety, quality, and value and frequently arise from failure to provide adequate information to the customer.

Ethical issues relating to the product or service may range from omission of uncomfortable facts in product literature to deliberate deception.

Some important considerations that an ethical organization may make include:

· Whether its advertising is fair, balanced and truthful?

· Who does it sell to?

· Are its products appropriate, safe and environmentally friendly?

· How does it deal with unhappy customers?

· Does it exploit anyone in its advertising or pricing strategies?

Benefits to socially responsible and ethical organizations

1) Competitive advantage: being socially responsible may be a unique selling point and offer the organization an opportunity to create a distinct identity for itself and its products

2) Greater revenue: socially responsible organizations can often charge a premium for their products

3) Reduced costs: some costs may be reduced if an organization adopts socially responsible practices

4) Positive publicity: introducing changes voluntarily, before any regulations come into force, will reflect favourably on the organization.

Social Marketing

Social Marketing is the application of marketing techniques to achieve non-commercial goals to encourage behaviour that benefits the environment or to encourage good health. Governments may attempt to use social marketing to encourage consumption of merit goods and discourage consumption of demerit goods.

• Role of culture in marketing - https://geerthofstede.com/culture-geert-hofstede-gert-jan-hofstede/6d-model-of-national-culture/
• Access the following website and choose Germany and Singapore as the comparison countries - https://www.hofstede-insights.com/country-comparison/

• Task 9: Read the information on both countries. Watch the following advertisements related to a German brand (Mercedes-Benz) and Singaporean brand (UOB). Note down how some or all of the cultural dimensions are communicated through the advertisement

Ethics & Innovation

In an ever-changing global scenario, marketing has become the eyes and the ears of a firm, which provide it with the early warning signals and insights on how to anticipate and prepare for changes. Technology has played a key role in transforming marketing. The most important shift in this new paradigm is the change from a mass marketing mentality to segments database marketing and mass customization, which has made it possible for companies to reach individual customers economically with customized messages, products & services. We are in a way going back to the Primitive marketing system using electronic barter system.

Marketing innovation strategy play a very important role in launching a new product in the market competition of the competitors, various channels of distribution, customer segment in the market, network strategy of the distribution of the product etc. all these dimensions are required because it can affect to the purchase level of the customer and product share volume in the market. Companies have move from traditional marketing to modern marketing, which calls for more than developing a product, pricing it, promoting it, and making it target customers.

Product

The most visible changes in the sphere of marketing have obviously occurred with respect to product. Not only has there been a range of truly innovative offerings or new variants of existing products but there has also been a lot of thought and effort expended in divising new designs, new packaging, new features and even modifications to stocks keeping units. Products have an identity and a personality of their own. Products also embody the ethical decisions made at the corporate level. Tobacco and alcohol advertisements are extremely popular targets for regulations. The tobacco industry faced an ethical dilemma when the Government considered banning its products. The main objective of such a ban is to discourage adolescents from consuming tobacco products from an ethical stand point the Government should discourage the habit, as it is responsible for welfare of its citizens. The other ethical aspects in product is updating of consumer products. In the process of manufacturing and new product development, products may then lose their basic characteristics, when the product is updated service or spare parts for the earlier versions may no longer be available. This creates a dissatisfaction among customers and they may not be willing to buy a new product from that particular company. To stimulate market growth, companies must add new features without robbing the product of its basic identity and provide information to its customers. This goes in accordance with the basic principles of marketing that lay importance on providing satisfaction to consumers and reaping profits at the same time. Communication about offered products is deceptive. Misleading information decreases customer satisfaction as the products fail to meet customer expectation. Socially responsive practice may lead companies to design new products which enable them to develop new sources of competitive advantage. For example, Unilever in India has developed products such as low-cost tooth powder and fortified staple food stuffs as well as smaller, more affordable pack sizes (sachets). Use and throw – away culture as well as the tendency to upgrade products leading to shorter usage cycles are also a noticeable phenomenon.

Source - http://www.iosrjournals.org/iosr-jbm/papers/ncvbm/volume-1/8.pdf

Task 10: Group-based work - contemporary consumer trends

Form groups of 3 - access the document 'Top 10 Consumer Trends 2019'

1. Choose one of the ten trends
2. Construct a three-slide Presentation on that one trend.
3. The presentation should follow the same structure as the report:

• What is the trend? e.g. 'Age Agnostic'
• How have a firm or firms responded to this trend?
• To what extent will this trend affect your generation i.e. Generation Z?

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