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MGT301 - Principles of Marketing - Lecture Handout 04

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Lesson overview and learning objectives:

In last Lesson the focus of discussion was core concepts of the marketing and the increasingly important role of the marketing process in the ever-changing domestic and global business environment Today we will be covering following topics:

A. MARKETING IN HISTORICAL PERSPECTIVE AND
EVOLUTION OF MARKETING

The marketing concept is a matter of increased marketing activity, but it also implies better marketing programs and implementation efforts. In addition, the internal market in every company (marketing your company and products to and with the employees of the company) has become as challenging as the external marketplace due to diversity and many other social/cultural issues.
What image comes to mind when you hear the word “marketing”? Some people think of advertisements or brochures, while others think of public relations (for instance, arranging for clients to appear on TV talk shows). The truth is, all of these—and many more things—make up the field of marketing. Marketing as “planning and executing the strategy involved in moving a good or service from producer to consumer.”
With this definition in mind, it’s apparent that marketing and many other business activities are related in some ways. In simplified terms, marketers and others help move goods and services through the creation and production process; at that point, marketers help move the goods and services to consumers. But the connection goes even further: Marketing can have a significant impact on all areas of the business and vice versa. Lets discuss some Marketing Basics In introductory marketing you learned some basics—first the four P’s, and then the six P’s:

  • Product—What are you selling? (It might be a product or a service.)
  • Price—What is your pricing strategy?
  • Place or distribution—How are you distributing your product to get it into the marketplace?
  • Promotion—How are you telling consumers in your target group about your product?
  • Positioning—What place do you want your product to hold in the consumer’s mind?

Personal relationships—How are you building relationships with your target consumers?
Marketing management is the conscious effort to achieve desired exchange outcomes with target markets. The marketer's basic skill lies in influencing the level, timing, and composition of demand for a product, service, organization, place, person, idea or some form of information. There are several factors that participated role to evolution of marketing like

1. Changes in Consumer Behavior

There have been many major marketing shifts during the last few decades that have shaped marketing in the 21st century. There is a view among professional marketers that there is no longer the substantial product loyalty that existed over the last few decades. Product and brand loyalty, many argue, has been replaced by something more akin to a consumer decision that is based on the absence of a better product or service. In addition, there are major changes in the way customers look at market offerings. During the 1980s customers were optimistic, and in the early 1990s they were pessimistic. Later in the 1990s, consumers appeared rather optimistic, but still cautious at times. The following chart demonstrates some of the major shifts that have occurred to the present:

Increasingly it is clear that while the 4 Ps (product, price, promotion, and place) have value for the consumer, the marketing strategies of the 21st century will use the four “4 Cs” as added critical marketing variables:

  1. Care: It has replaced service in importance. Marketers must really care about the way they treat customers, meaning that customers are really everything.
  2. Choice: Marketers need to reassess the diversity and breadth of their offerings into a manageable good-better-best selection.
  3. Community: Even national marketers must be affiliated, attached to neighborhoods wherever they operate stores.
  4. Challenge: The task of dealing with the ongoing reality of demographic change.

2. End of the Mass Market

During the late 1990s, we witnessed the death of the concept of mass market. Regardless, some marketers continue to argue that database marketing will never replace mass marketing for most products. The view is that communicating with users by e-mail, Web site, mail, telephone, or fax will never become cost-efficient enough to justify the return. However, the success of the Internet provides considerable evidence that one-to-one marketing is and will be appropriate for many packaged goods and other high- and low-involvement products that in the past sold almost exclusively with brand advertising.
Through the 1970s, only high-end retailers and personal-service firms could afford to practice oneto- one marketing. For the most part, they did it the old-fashioned way with personal selling and index-card files.
During the 1990s, bookstore chains, supermarkets, warehouse clubs, and even restaurants began to track individual purchase transactions to build their “share of the customer.” Many of these programs now run on Personal Computers platforms or workstation environments much more powerful than the most capable mainframes of the 1970s. It is possible today to track 5 or 6 million customers for the same real cost as tracking a single customer in 1950. With Internet-based databases and remote access, this capability literally has exploded in the last few years.
The situation will become even more interesting as one-to-one marketing becomes even increasingly pervasive. With an increasingly powerful array of much more efficient, individually interactive vehicles, the options are virtually unlimited, including on-site interactivity, Web site connections, fax-response, e-mail, and interactive television.
Most households today either have direct Internet access, or with TV sets that also provide realtime interactivity through the Internet. We are closing rapidly on the time where individuals will interact with their television and/or computer simply by speaking to it. Via various Web sites, computers work for us to enable us to remember transactions and preferences and find just the right entertainment, information, products, and services. Likewise, online capabilities enable providers to anticipate what a consumer might want today or in the future. Unfortunately, the system has been slower to protect consumers from commercial intrusions that they may not find relevant or interesting.
The increasing level of market definition and refinement (and resulting opportunities for marketers) is possible through the massive social, economic, and technological changes of the past three decades. Some of the important demographic shifts have been:

  • Increasing diversity of the population. The United States has always been an immigrant nation. However, large numbers of immigrants from Latin America and Asia have increased the proportion of minorities in the country to one in three, up from one in five in 1980. This diversity is even more noticeable in the younger market.
  • Changing family and living patterns. There has been a substantial rise in the divorce rate, cohabitation, non-marital births, and increased female participation in the labor force. In addition, married couples with one earner make up only 15 percent of all households. Dual-earner households have become much more common—the
    additional income is often necessary for the family to pay their bills. Thus, older have replaced the stereotypical family of the 1950s, working parents with much less time available.
  • Emergence of a new children’s market. Minorities are over-represented in the younger age brackets due to the higher fertility and the younger population structure of many recent immigrants. The result is that one in three children in the United States is black, Hispanic, or Asian. In addition, nearly all of today’s children grow up in a world of divorce and working mothers. Many are doing the family shopping and have tremendous influence over household purchases. In addition, they may simply know more than their elders about products involving new technology such as computers.
  • Income and education increases are two other important demographic factors impacting the marketing management arena. Generally, income increases with age, as people are promoted and reach their peak earning years, and the level of education generally has increased over the last few decades. Family units today often have higher incomes because they may have two earners. Accordingly, there is an increased need for products and services because they likely have children and are homeowners.

In sum, the need for market analysis and marketing decision-making, and managers to perform those tasks has never been greater. But, as the course will demonstrate, the complexities of, and analytical tools required for, these activities have never been greater. Be prepared for a challenging experience.

3. Marketing Management Philosophies:

Marketing Management Philosophies

There are several alternative philosophies that can guide organizations in their efforts to carry out their marketing goal(s). Marketing efforts should be guided by a marketing philosophy. Decisions about the weight, given the interests of the organization, customers, and society need to be made by marketing managers. There are five alternative concepts under which organizations conduct their marketing activities.

a. The Production Concept

The production concept holds that consumers will favor products that are available ad highly affordable and that management should, therefore, focus on improving production and distribution efficiency. This is one of the oldest
philosophies that guide sellers. The production concept is useful when:

  1. Demand for a product exceeds the supply.
  2. The product’s cost is too high and improved productivity is needed to bring it down.

The risk with this concept is in focusing too narrowly company operations. The production concept holds that consumers will favor products that are affordable and available, and therefore management’s major task is to improve production and distribution efficiency and bring down prices.

b. The Product Concept

The product concept holds that consumers favor quality products that are reasonably priced, and therefore little promotional effort is required. The selling concept holds that consumers will not buy enough of the company’s products unless they are stimulated through a substantial selling and promotion effort. The product concept states that consumers will favor products that offer the most quality, performance, and features, and that the organization should, therefore, devote its energy to making continuous product improvements. The product concept can also lead to “marketing myopia,” the failure to see the challenges being presented by other products.

c. The Selling Concept

Many organizations follow the selling concept. The selling concept is the idea that consumers will not buy enough of the organization’s products unless the organization undertakes a large-scale selling and promotion effort.

  1. This concept is typically practiced with unsought goods (those that buyers do not normally think of buying e.g. insurance policies).
  2. To be successful with this concept, the organization must be good at tracking down the interested buyer and selling them on product benefits.
  3. Industries that use this concept usually have overcapacity. Their aim is to sell what they make rather than make what will sell in the market.
  4. There are not only high risks with this approach but low satisfaction by customers.

d. The Marketing Concept

The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do. The marketing and selling concepts are often confused. The primary differences are:

  1. The selling concept takes an “inside-out” perspective (focuses on existing products and uses heavy promotion and selling efforts).
  2. The marketing concept takes an “outside-in” perspective (focuses on needs, values, and satisfactions). Many companies claim to adopt the marketing concept but really do not unless they commit to market-focused and customer-driven philosophies:
    • Customer-driven companies research current customers to learn about their desires, gather new product and service ideas, and test proposed product improvements.
    • Such customer-driven marketing usually works well when there exists a clear need and when customers know what they want.
    • When customers do not know what they want, marketers can try customer driving marketing--understanding customer needs even better than customers themselves do, and creating products and services that will meet existing and latent needs now and in the future

e. The Societal Marketing Concept

The societal marketing concept holds that the organization should determine the needs, wants, and interests of target markets. It should then deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and the society’s well being.

  1. The societal marketing concept is the newest of the marketing philosophies.
  2. It questions whether the pure marketing concept is adequate given the wide variety of societal problems and ills.
  3. According to the societal marketing concept, the pure marketing concept overlooks possible conflicts between short-run consumer wants and long- run consumer welfare.
  4. The societal concept calls upon marketers to balance three considerations in setting their marketing policies:
    • Company profits.
    • Customer wants.
    • Society’s interests.
  5. It has become good business to consider and think of society’s interests when the organization makes marketing decisions.

4. Evolving Views of Marketing’s Role:

Evolving Views of Marketing’s Role

As expressed in figures initially the Marketing was considered to play equal function as other departments of the organization. But with the passage of times and growing importance of the customers marketing department attained
more importance and attained the central part in the organization.

Evolving Views of Marketing’s Role1

Afterwards the customer is now the main actor that is controlling almost all functions and efforts of the marketing department, because the success of any organization in today’s competitive era depends upon the level of satisfaction
provided by the company. Nowadays the marketing department is acting, as integration department to provide
integration among the functions performed by the company and customer is acting as controlling factor in the organization

Evolving Views of Marketing’s Role2

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