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B. WHAT IS MARKETING?
Marketing is now recognized almost as a science.
It is seen as a logical approach to business which involves the studying, and understanding, of
relationships and exchanges between buyers and sellers.
Various definitions of "marketing" have been proposed by practitioners of marketing:
"Marketing is a human activity directed at satisfying needs and wants"(Kotler).
"The management process responsible for identifying, anticipating and satisfying customer requirements profitably" (CIM).
In marketing terms, a customer's needs, wants or requirements tend to mean a product or service.
Products are tangible, albeit the wider meaning of a product includes intangible benefits such as after
sale service and services are intangible.
People can satisfy their requirements, or problems, in one of four ways:
a. Self-solution (coming up with the answer to the problem themselves)
b. Force (threatening/stealing)
c. Begging (pleading/seeking sympathy)
d. Exchange (offering something of value to the owner).
This value exchange summarises marketing and applies in every type of product exchange, from the
simple purchase of a bar of soap by a customer in a supermarket, to the purchase of attack aircraft by a
government.
In every case both parties give, or exchange, something of value to the other. For this to be possible, two
parties must:
a. Have something of value to exchange
b. Be capable of communicating
c. Be free to accept or reject the exchange situation.
d. The existence of these criteria does not necessarily mean that an exchange WILL take place only
that it is possible.
Production Concept
A company following this concept is operating on the idea that the more you can produce the more you
can sell.
Managers assume that customers are only interested in the availability of products and low prices
and that marketing is not necessary. This may or may not be true.
Consider the following examples:
a. A fashion company making exclusive dresses, selling on average at £3,000, produces and sells 12 dresses
each month. If they were to double their production rate it is unlikely that they could retain their
"exclusive" appeal.
b. This would mean prices would have to be reduced and revenue would fall not to mention the increased costs
in materials and labour needed to make more dresses.
Companies following a production orientation gain from:
a. Economies of scale
b. Reduced marketing and production costs
c. Greater market share
d. Strength over the competition.
Product Concept
This type of orientation is present when managers in the company believe that customers will
recognize a good product or service and buy it when it is made available.
The managers have such a firm belief in the quality and appeal of their product that they cannot
accept that customers may not readily see the same advantages and they fail to undertake any marketing
or even carry out essential research before beginning production.
Consequently the managers are dumbfounded when customers are not beating a path to their door to
buy up the existing stocks
We must not overlook the fact that sometimes a good product does have a good future and that the belief of a
manager can save the product from disappearing.
Innovative products spring from creative minds and sometimes creative minds can be far ahead of the
majority of the public.
It is only after a period of time, and education, that people will appreciate the benefits and begin to buy.
The product may then take off and become very successful.
If every new product that did not sell was dropped immediately we would never move forward, but to simply go
ahead and produce a product because its creator believes in it is dangerous.
Companies following a product orientation can only be successful if:
a. There is a current demand for the product
b. There is a potential demand for the product
c. Products are given full marketing support
d. Products meet customer requirements.
Thus it is obvious that product orientation MUST, if it is to be successful, be adopted only after research
has been carried out.
Sales Concept
Orientation on selling means that the company sells what it makes ²it does not make what it
can sell.
Managers believe that buyers have to be "coaxed" into buying by aggressive techniques.
This will involve heavy activity on the selling and promotional aspects with perhaps discounted prices
being used and incentives to buy being offered.
The company is more interested in "moving stock" than in stocking the right goods.
Sales orientation usually implies the existence of an aggressive sales-force and this can bring a
company into disrepute.
If a salesperson is more interested in his/her commission from a sale than in repeat business
from a customer they are more likely to use methods which could be, to put it mildly, disreputable.
Corporate reputations can be damaged very easily, but can take a long time to be recovered.
The sales concept only works when:
a. There is little need for an after-sales service
b. Companies are not interested in forming relationships with customers
c. Buyers have low expectations of the product or service
d. Repeat purchasing is unlikely.
Marketing Concept
Companies following the marketing concept firmly believe that the customer is the key to
successful business.
Unlike the three concepts discussed above, the marketing concept actually begins WITH the
customer and the company is trying to provide what the customer wants rather than making the customer
want what the company has.
If an organization is following the marketing concept it will have three distinct characteristics:
a. Customer Orientation – The organization must define customer needs from the point of view of the
customer and not its own. It will need to seek information actively from the marketplace in order to assess
whether the offerings are meeting customer requirements and, if not, why not.
b. Organizational Integration – all functions, sections or departments of the organization must
work together to meet the overall objectives of the organization which must be to satisfy customer
requirements. When individual sections of a company do not fit in with the total effort there may be friction or
problems which can result in lost opportunities or dissatisfied customers.
c. Mutually Profitable Exchange – The organization is entitled to a reasonable profit for a reasonable
product. The customer is entitled to a reasonable product for a reasonable price. In other words ²both should be
satisfied. This satisfaction may well be the result of negotiation where the customer has accepted
an alternative product or where the organization has had to accept a lower profit ²but they must be
satisfied with the exchange. If it is not a mutually accepted exchange, it is not marketing.
Introducing the Marketing Concept – The activities called "marketing" go on in most companies and it
is useful to identify just what level they work at. If the marketing function can be shown to be useful to
other departments, any changes which may be recommended will be accepted more readily. When
"marketing" can be seen to be beneficial to other departments, changes can be made so the total
marketing effort is more efficient.
Internal Marketing – You might have deduced by now that the marketing manager has a marketing job to do
within his own company if he is to introduce the marketing concept fully and effectively. Internally, there is a variety
of “customers", starting with the chief executive (to be handled with care) and including all the
directors and senior managers. The marketing effort required here will be to persuade them that the
inconveniences which marketing will demand are worthwhile in the long run. Many of the ideas used to
communicate with customers outside the company can also be used, with modifications, to
communicate with people inside the company.
Changes in the company's strategy, as it changes from sales orientation to marketing orientation, will be
evident to people outside the company in various ways and we can look at some of the more
significant strategic changes.
Product Design
Customers will see the changes which they asked for in design now begin to be available, whereas
the sales-oriented company just wanted to push what they had or could get easily. Customers will notice that the
sales team will ask more questions and there may even be marketing researchers asking questions about
desirable features in products.
Suppliers
The old, long-run demands for existing products will be replaced by shorter-run demands for different
products to suit customers' needs. There ought to be a new enthusiasm in the company, which will be reflected in
purchases of raw materials and components. Product line changes will show in different buying patterns
in the company and ideas might also come through for quite different types of supplies.
Publicity
A marketing-oriented company will be much more "visible" inappropriate journals and maybe in other
media too. There will be more originality in the design of advertising campaigns and evidence of co-
ordination of different media.PR campaigns will be evident and the company name will feature more prominently
in trade and other journals as articles are published by the company's technical experts. If the new strategy
runs to sponsorship of sporting events, there will be dramatic changes in publicity efforts; selling activities
ought to synchronize with sponsorship activities as far as possible.
Distribution
"When do you want it?" might surprise some customers who have become accustomed to "You'll have it
next Tuesday, when the lorry will be round your way".
Scheduled deliveries to fit in with the customer's production plans may even feature in the strategy of a
marketing-oriented company. "Just-in-Time" deliveries are part of the marketing strategy of some suppliers,
who get the benefits of long-term association with valued customers.
Prices
There are not likely to be any bargains simply because a company changes its strategy from sales to
marketing orientation, but the prices and terms which are applied are likely to be more realistic. Financial
arrangements should be more in line with the customer's individual needs, because the marketing-
oriented company will see the total offering, from analysis of the customer's needs right through to
satisfying them, as one integrated concept.
Matrix – This is a form of management structure which involves bringing personnel from
various sections of an organization together for specific reasons. Predominantly used for a problem-
solving exercise, it is most commonly used for managing complex projects and has the benefit of multiple-
skilled and experienced people working together. NASA (North American Space Agency) was
one of the first organisations to use this type of structure when they wanted to land a man on
the moon!
Strategic Business Units – The evolution of markets and business into the highly complex and
competitive state which exists today has led many companies to base their activities on Strategic
Business Units (SBUs). This idea was first introduced by McKinsey & Co. (USA) for
General Electric in the early 1970s but it is common practice today.