Market Led Management

The Evolution of Marketing Theory And Practice

Todays Objectives:

Examine the evolution of marketing theory

Evaluate the role of marketing in the 21st century

Assess global dynamics which are impacting business and marketing activity Introduction and briefing of assignment

Quote!

The enigma of marketing is that it is one of mans oldest activities and yet it is regarded as the most recent of the business disciplines
Michael J Baker; Marketing: Theory and Practice Macmillan 1976.

Conventional Marketing Thinking

Organise by product units Focus upon profitable transactions Judge performance by financial results Focus upon satisfying shareholders Marketing department does the marketing Build brands primarily through advertising Emphasis customer acquisition Measure customer satisfaction Over-promise to get the order Make the firm the unit of industrial analysis

Source: Kellogg School of Marketing: 2001

Marketing Misunderstood
Sales Led - Marketing;
- sales function assumes new role - little focus on quality, service or customer

Traditional Marketing Department

- functional efficiency - promotion and research focus - tactical not strategic

Finance Led Marketing

- focus on short term financial returns - no emphasis on R&D, relationship management

Formula Marketing
- emphasis on control the past drives the future - little or no future perspective
Michael J Baker: The Marketing Book 2008

Marketing: The essential ingredients?

Starts with the customer A long term perspective

Full use of company resources

Innovation

Michael J Baker: The Marketing Book 2008

A Marketers Dilemma
Mass to individual Limited choice to abundance of choice. Loyal to transient. Passive to interactive. From the book to the screen. Theres reality, and theres reality Local - Global - Local - Community Wealthy yet thrifty.

Factors Forcing Change

Increasing volatility in market positions

Ubiquitous nature of information

Blurred competition and industry boundaries

Growing concern about the social and ecological environments

Transient needs shorter product life cycles

Discount searching is the new cool.

Shifting back to individuality, independence, identity.

Evolution of Consumer Marketing

Customer Sophistication

High

Value Based Marketing

Relationship Marketing

Low

Brand Marketing

Transactional Marketing

High

Low Customer Loyalty

Source: anonymous

Transactional Marketing
Established in the 1890s rose to ascendancy between 1950-1970s

Focused on simple one-off exchange processes

Essential ingredients were the Marketing Mix - 4Ps.

US companies based their whole organisation around the Marketing Department

Marketing department = Marketing function.

Transaction marketing suited to high growth, excess demand markets (1990s equivalent = the mobile telecoms markets)

But not based upon customer interaction or long term relationships

Brand Marketing
Transactional marketing focused on un-differentiated goods Customers required difference, value, recognition, trust. Brands emerged strongly in the 1970s Helped to differentiate between manufacturers Brands enabled customers to make effective choice, stimulated patronage of the product

Branding later extended into services, organisations in the 1980s and beyond.

Relationship Marketing
RM essentially has four major foundations - channel management and intermediaries
- business-to-business - services - database and direct marketing.

IMP Group focus on channels, business-to-business. Nordic and Anglo-Australian Schools focus on services. 1980s: The power of computer h/w and s/w lead to the emergence of database and direct marketing. Building relationships with customers via customer volunteered information and census/market research data.

Value Based Marketing

Some customers are more profitable than others:

Pareto rule of 80/20 : KPMG rule of 140/15

Understanding customers requires intelligent marketing information

Need for tailored and focused marketing programmes.

Some of the most valued brands DO NOT work on the basis of database or direct marketing techniques. BUT they do recognise the need to value and maintain profitable customers

How Marketing Drives Value

Market selection

Market knowledge
MARKETING VALUE DRIVERS Customer base Strategic relationships Differential advantage

Brand strength

Holistic Marketing
Senior Management

Functional Departments Marketing

Goods and services Communications Channels

Internal Marketing

Integrated Marketing

Holistic Marketing
Social Responsibility Marketing Relationship Marketing

Ethics Legal Environment Community

Customers Channels Partners Suppliers

Source: Kotler & Keller Marketing Management 12ed

Marketing: Searching for a new paradigm

Traditional marketing mix reflected a supply side focus - marketing mix simple and constrained
- need to re-focus on the customer

Marketing exchange has shifted from the tangible to the intangible - emphasis is upon service and not goods Consumers are no longer passive receivers but interactive co-creators/co-producers Knowledge and competence based competitive advantage .and yet large parts of the world are not yet consumers!!