Everything you need to know about the marketing. Marketing originates with the recognition of a need on the part of a consumer and terminates with the satisfaction of that need by the delivery of a usable product at the right time, at the right place and at an acceptable price.
“Marketing is the process of determining consumer demands for a product or service, motivating its sales and distributing it into ultimate consumption at a profit.” – E.F.L. Brech.
1. Definitions of Marketing 2. Goals of Marketing 3. Importance 4. Philosophies 5. Dimensions
6. Examples 7. Impact 8. Managerial Functions 9. Philosophy and Implications 10. Future 11. Criticism.
What is Marketing? – Definitions, Goals, Importance, Factors, Future and Criticism
- Definitions of Marketing
- Goals of Marketing
- Importance of Marketing
- Philosophies of Marketing
- Dimensions of Marketing
- Examples of Marketing Practices
- Impact of Marketing
- Managerial Functions of Marketing
- Philosophy and Implications of Marketing
- Future of Marketing
- Criticism of Marketing
What is Marketing – Definitions: Provided by The American Marketing Association, J. P. Pyle, E.F.L. Brech and Paul Mazur
The concept of marketing has evolved from a simple exchange transaction to a complex and complicated one, involving a number of interconnected and interrelated variables. As the concept of marketing undergoes a change, numerous definitions have been put forward by different thinkers at different intervals.
These thinkers have given us definitions depending upon the existence of a particular concept of marketing that was prevalent when these definitions were put forward. Another reason for the variations in definitions lies in the fact that ‘Marketing’ has no recognised central theoretical base as exists for many other disciplines like physical sciences and some behavioural sciences.
The earlier definitions of marketing emphasised the flow of goods from the seller to the buyer. In this traditional sense, “Marketing” is said to consist of such efforts as effect the transfer in ownership of goods and their physical distribution.
“Marketing is the performance of a business activity that directs the flow of goods and services from the producer to the consumer”. – The American Marketing Association
This emphasis was later shifted to an economic approach. Economists stressed upon the utilities and interpreted marketing as a creator of time, place and possession utilities.
“Marketing originates with the recognition of a need on the part of a consumer and terminates with the satisfaction of that need by the delivery of a usable product at the right time, at the right place and at an acceptable price.”
Later, people became aware of the legal aspects of marketing, viz. the changes in the ownership and possession of goods and services.
“Marketing may be thought of as that phase of business activity through which human wants are satisfied by the exchange of goods and services on one hand and some valuable consideration usually money or its equivalent on the other hand. The transaction involves ‘transfer of ownership’ usually but not necessarily a ‘transfer of possession’ and transportation of goods. – J. P. Pyle
In the subsequent stages the emphasis was once again shifted to the customer.
“Marketing is the process of determining consumer demands for a product or service, motivating its sales and distributing it into ultimate consumption at a profit.” – E.F.L. Brech.
Marketing today is so basic that it cannot be considered as a separate function. It is really the whole business as seen from the point of view of the final result i.e. from the point of view of the customer.
What is Marketing – Goals
The generic goal of marketing is to promote the company product in a way that it’s always ahead of competitor’s product. This goal can be achieved by paying attention to the customers need and want and establishing a strong profitable relationship with customers.
Marketing is an interface of the company it is not only about making new customers it is also about retaining the existing one. It is said that it is far more expensive to obtain customers than to retain them. Companies such as Apple, Microsoft, Tata, and Reliance spend a hefty amount in their marketing activities.
The other goal of marketing is to promote the participants who make a product available from the point of origin to the point of consumption such as suppliers of raw material, wholesalers, distributors, retailers of final product. Promoting the other participants help the companies to handle the irregularities in demand.
For example Big Bazar’s strategy to lower the price of most of the item on every Wednesday is a marketing gimmick directed towards increase in sale in middle of the week and to avoid long queues on weekend.
The corporate mission is also one of the goals of marketing. Corporate mission here means expansion of business, in the expansion process marketing plays an important role. Company can expand by not selling what they are producing but by producing what people want and informing the people about it.
Marketing is going through an evolutionary phase where creating a need and then satisfying has become an important aspect. If all activities such as increasing customers loyalty, promoting the product and participants and achieving corporate mission are orchestrated well and in one direction marketing goals are achieved.
What is Marketing – Importance: To the Society, Firms and Consumers
1. To the Society:
i. Marketing helps in boosting the standard of living of the customers. Marketing continuously identifies the needs and wants satisfying products or services which can boost the people to take up additional work to earn money which can be exchanged for the desired products or services. The people are likely to spend the additional income over and above the disposable income on the products or services which helps in minimizing the physical efforts.
ii. Marketing generates gainful employment opportunities both directly and indirectly. Directly marketing provides employment to the people in various areas like in advertising agency, in the company sales force, in the distributor’s sales force, in public relation firms etc. Indirectly, marketing is responsible for selling the offerings of the organization.
If the organization’s products or services are able to satisfy the customers, then customers will demand organization’s products or services again and again, thereby sustaining the production activities. Thus marketing indirectly provides employment in other functional areas like finance, production, research and development, human resource management etc.
iii. Marketing helps in stabilizing economic condition in the sense that marketing helps in selling the products or services, which keeps the various organizations functioning that results in gainful employment of the people.
With the earnings from employment, the people can purchase the products and/or services, thus sustaining the demand. This happens in all the industries, and gainful employment is available throughout the time period and economy remains stable, healthy and vibrant.
i. Marketing Sustains the Company by Bringing in Profits:
Marketing is the only activity that brings revenue to the firm, whereas other activities incur expenditure. If the company’s products or services satisfy the customers’ requirements, then the satisfied customers will keep the company in business through repeat orders and by recommending other profitable customers. Thus marketing is the driving force behind a successful company.
ii. Marketing is the Source of New Ideas:
New product or service ideas usually come from the research laboratories, employees or from marketplace. It is the marketing people who are in continuous touch with the consumers and marketing intermediaries. Interaction with them helps in identifying strong and weak points of company’s product or services as well as competitor’s products or services.
This interaction also helps in identifying unfulfilled needs or wants of the consumers and identify the features consumers are looking in the products or services that can satisfy those unmet needs or wants. Thus, marketing can help immensely in identifying new product or service ideas which can help in sustaining the firm’s operations. Successful companies are those which identify the customer requirements early and provide solution earlier than the competitors.
iii. Marketing Provides Direction for the Future Course:
The marketing oriented company continuously brings out new product and service ideas, which provide the direction for corporate strategic planning for longer time horizon.
i. Meeting the Unmet Needs or Wants:
Marketing identifies those needs or wants which were not satisfied and helps in developing the product or service which can satisfy those unmet needs or wants of the people. For example a number of drugs were invented to treat various physical problems of the people. Still the low cost formulations were developed to treat the people who are unable to afford the expensive drugs.
ii. Reducing the Price of Products or Services:
Marketing helps in popularizing the product or service which attracts the customers as well as competitors towards that product or service categories. Due to increase in demand, the manufacturing capacity increase which brings down per unit fixed costs of the product or service. Furthermore, increase in competition led to decrease in the prices charged by the firm.
Thus the growing demand and increasing competition both help in bringing down the price of the product or service. For example price of both mobile phone handset and mobile phone service are showing a continuous downward trend thereby making the mobile phone service affordable to more and more people.
What is Marketing – 4 Important Philosophies: Production, Product, Selling and Marketing Concept
The concept of marketing has evolved through different stages from production orientation to societal orientation. The modern marketing highlights satisfaction of consumer needs and, wants whereas the societal concept cares for the well-being of the consumers as well as that of society.
These orientations/philosophies of marketing are described below:
1. The Production Concept:
“The Production Concept holds that consumer will prefer products that are widely available and inexpensive.”
Managers of production oriented businesses concentrate on achieving high production efficiency, low costs and mass distribution. They assume that consumers are primarily interested in product availability and low prices.
The organizations are production oriented in nature and try to achieve high production efficiency and emphasizes on wider supply of goods and services. This concept began in 1600s with the colonization of America and continued till the later part of 19th century. In those days primary motive of the organization was to make the product available to consumers and to keep the price low.
In those days, the demand of products used to exceeds the supply. In this particular situation consumers were more interested in obtaining the products rather than in its quality and features. The producers used to enjoy the huge economics of scale and it was very difficult for the new entrant to enter into the market as the existent marketers used to enjoy a kind of monopoly situation.
But the marketers, after a certain period of time, could not get the best of consumer patronage. The reason was that the consumers were motivated to seek varieties while purchasing. As a result, the production concept fails to serve as the right marketing philosophy for the enterprises.
2. The Product Concept:
“The Product Concept holds that consumers will favor those products that offer the most quality, performance or innovative features”.
Managers in these organizations focus on making superior products improving them over time. They assume that buyers admire well-made products and can appraise quality and performance.
The managers of these organizations spend considerable energy, time and money on research and development to introduce quality and variations in products. However, some of the managers are caught up in a love affair with their product and do not even realize that the product is not required in the market.
The great philosopher of marketing Prof. Theodore Levitt describes this particular situation as – “marketing myopia”. The marketers can add any kind of attribute to their products but if consumers are not aware regarding the availability, how can they go for purchasing that particular product. This phenomenon gave birth to another concept i.e.; selling concept.
“The Selling Concept holds that consumers and businesses if left alone, will ordinarily not buy enough of the organizations products. The organization must, therefore, must undertake an aggressive selling and promotion effort.”
This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotion tools to stimulate more buying.
This philosophy maintains the view that an organization cannot expect its products to get picked up automatically by the consumers. The organization has to put certain efforts consciously to push its products. In this concept, the firm makes the product first and then spells out how to sell it and make profit.
The problem with the selling orientation is that it does not take consumer satisfaction into account. In this situation, when consumers are compelled to buy products that they don’t need, consequently unhappiness is likely to be communicated through negative word-of-mouth that may dissuade other potential consumers from making a similar purchase.
4. The Marketing Concept:
“The Marketing Concept holds that the key to achieving its organizational goals consists of the company being more effective than competitors in creating, delivering and communicating customer value to its chosen target markets.”
What is Marketing – 5 Key Dimensions: Competitors, Performance, Consumers, Co-Ordination and Organisational Capabilities
There are five key dimensions to marketing described below:
Adopting and implementing a marketing orientation also acts as a competitive tool for an organisation in that the organisation which is most successful at meeting the needs of its consumers in a cost-effective way will be placed in a relatively strong competitive position.
In practice, it may not matter whether the products being marketed as a very good match to consumer needs or a very poor match in absolute terms, what does matter is whether the organisation is able to meet consumer needs more or less effectively than its competitors.
Dimension # 2. Performance:
Marketing should be viewed as an activity that is concerned with improving organisational performance; certainly it will increase costs but successful marketing will also provide the means to increase sales and profits.
Extra costs may be incurred in order to establish the nature of consumer demand and modify products in order to come as close as possible to matching this demand. In turn, this would typically lead to either an increase in the volume of sales on the ability to charge a rather higher price for a product which more closely matches consumer needs, and thus generate a higher revenue.
The nature for the goods or services that an organisation produces should be guided by these needs and wants rather than by simple criteria of cost and efficiency in production. The organisation must therefore concern itself with clearly identifying its consumers.
It is not sufficient simply to know who these customers are; the organisation must also establish what they expect and what they want. Consumers may be viewed as a single group or as separate subgroups (segments) with distinctive needs and wants. The products that are produced should match the needs of the organisation’s consumers, in terms of the features and benefits offered their availability and their price.
In the current competitive climate, it is often suggested that marketing is far too important a function to be left solely to the marketing department; rather it should be seen as a business philosophy and an orientation towards consumers that must permeate the entire structure of an organisation.
The marketing-oriented organisation will be successful only if the marketing philosophy is adopted, not just at senior management level but by employees at every level. Consequently, marketing is not just external in orientation, it is also internal. Internal marketing concerns itself with ensuring that staff at all levels within an organisation are aware of and understand their role in developing and maintaining a marketing orientation.
Coordination is not just about ensuring a common belief in the marketing philosophy at a given point in time; it is also about ensuring that marketing plays a key role in organisational development over time. To develop successfully, an organisation must remain aware of its customers and competitors and be responsive to changes in its markets. A failure to do so can potentially have serious consequences.
We should perhaps note at this point that it would be naive to suggest that marketing simply requires that the organisation establish consumer needs and supply products that precisely match those needs. If it were to do so, an unnecessary diversity of products may result, because consumer requirements are both highly variable and frequently change.
With such a diversity, it is likely that production, inventory and marketing costs will be so high that the organisation cannot then operate profitably. Thus, in reality, the marketing approach involves analysing consumer needs and evaluating the organisation’s capacity to supply those needs and whether it is appropriate to do so given the nature of the business environment. The ultimate aim is to ensure that the organisation creates a match between what its consumers want and the type of products it is capable of supplying.
What is Marketing – 8 Examples of Marketing Practices: Relationship, Sachet, Green, Rural, Destination, Cause-Related, Co-Branding and Online Marketing
Due to increased competition the companies had necessity to enhance additional features to their products to promote the sale of their products. Many companies followed different marketing practices to attract their customers.
Winning Concepts and Marketing Practices are:
1. Relationship marketing
2. Sachet marketing
3. Green marketing
4. Rural marketing
5. Viral marketing
6. Destination marketing
7. Cause related marketing
9. Online marketing.
Now-a-days many companies are practicing the new marketing concepts and practices.
Some of the examples are as follows:
The domain of relationship marketing extends into many areas of marketing and strategic decision making. In the phenomenon of cooperation and collaboration with customers becomes the dominant paradigm of marketing practices. Relationship marketing has the potential to emerge as the predominance perspective in the paradigm of marketing.
In the fierce competitive market customer relationship management is emerging as the core marketing activity in companies. For that to maintain companies practices customer retention strategies and having good relation with the customers. The following examples may be taken for further analysis.
HSBC bank sent greeting cards to the customers on their birthdays to have good relationship. Whirlpool do very good post sale service to the customers.
In India, Unilever successfully markets Sunsilk and Lux shampoo sachets sold in units of 2-4 dollar cents; Clinic All Clear anti-dandruff shampoo sachets at 2.5 rupees each; and 16 cent Rexona deodorant sticks.
It refers to the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in itself or produced and/or packaged in an environmentally friendly way.
Green marketing can be a very powerful marketing strategy though when it’s done right. Nowadays all companies are trying to produce eco-friendly products. And many companies have got ISO 14001 awards and strive to get.
The great Indian rural market is characterized by huge untapped potential and opportunities. It is estimated that almost 70% of Indian consumers live in rural areas, which generate almost half of the national income. The number of middle income households in rural India is growing to above 111 million by 2007. There are almost twice as many lower middle income households in rural areas as in the urban areas.
A large number of corporate are excited about tapping the potential of rural areas. The recent entry of some corporate like Bharti, ITC, DCM Shriram consolidated, EID parry and Amul etc. proved their fascination towards this sector. These corporates tried to develop successful model of integrating information-technology in rural transformation in a profitable way.
The Tamil Nadu based EID parry has developed an agro-portal www(dot)indiaagrline(dot)com to cater the specific needs of the rural farming community. It is an endeavor to catalyze e-commerce in agricultural and non-farms products by offering a network of partnerships. The content is available in local Tamil language.
The Anand, Gujarat based Amuls DISK dairy information system KIOSK project is yet another milestone of integrating corporate sector and information technology. These kiosk serve valuable information related to dairying, breeding and rearing cattle.
ITC e-choupal has emerged as one of the most ambitious project integrating information technology and corporate sector for rural transformation. ITC e-choupal network has already covered approximately 3.1 million farmers through 5050 choupal in 29,500 villages. The company has ambitious plan to reach 1,00,000 villages covering 10 million farmers by 2010 with whopping approximately 1,000 crore. It is opening 5-6 e-choupals every day in six different states of India.
Samsung follows Viral marketing, interactive marketing. Samsung created its “Fun Club” as a way to engage with Samsung mobile phone owners to help them get the most from their phones. Samsung provides content such as games, ringers, and wallpapers that are designed specifically for Samsung mobile phone models.
Hearing about new mobile content is one of the benefits of joining the “Fun Club.” Samsung was looking for a new way to use rich multimedia to promote the game, Skipping Stone, to its customers. Samsung engaged Enpocket to create a mobile marketing campaign promoting Skipping Stone using the graphically rich MMS channel.
In the present competitive scenario, there should be transition in marketing practices in order to survive in the market. Since “change in the only thing which never change” in the world, companies have to adapt themselves according to the changing environment. The best emerging practices in the corporate world is win-win concept to be the leader in the market.
Destination marketing is all about selling the experience. To sell the experience is far more difficult. In destination marketing media plays a major role. Word of mouth plays a vital role in destination marketing. People love to discuss their tour, infact they feel proud in telling their experiences, they bring gifts for their close ones they show their photographs and purchases to their relatives and neighbours.
Kerala has implemented the destination marketing very successfully and emerged as the most acclaimed tourist destination of the country in the recent past. Because of this destination marketing Kerala has achieved remarkable success in generating revenue and employment in state through tourism. It is estimated nearly $100 million which generate the employment opportunity in Kerala.
In the recent past all the successful stories of destination marketing that is Malaysia, Goa, Kerala, Singapore etc. Emergence of theme parks such as Adhisayam, MGM, and Black Thunder – all are examples of destination marketing.
Transition has taken place from kirana stores to modern organized retail outlets. Modern retailing in India are growing rapidly. Although it commands just 3% of the overall retail market share, changing demographics and consumer taste are driving the growth of more than 30% of the modern retail formats. It is expected to grow another 9% in the year of 2010. India is more attractive than ever to global retailers.
Cause related marketing is practiced on the rationale that consumers are human beings are kind hearted. The customers pay the amount with some satisfaction that the specific amount is to for relevant social cause. Examples, a sanitary napkin brand “whisper” announced a contribution to Re.1 on every pack of sales for blind relief society. This helps in improving whisper’s market share. HLL announced a contribution of Re. 0.50 on the sale of each of its brand of lifebuoy brand soap to a diarrhea project.
Co-branding is when two companies form an alliance to work together, creating marketing synergy.
This co-branding is innovative in the marketing practices.
i. Andhra Bank and ICFAI University are using the strategy of co-branding.
ii. Andhra Bank and Hindustan Petroleum also launched their co-branded card.
iii. SBI card and LG Electronics India launched the LG-SBI card. This is the country’s first co- branded credit card for the consumer appliances industry and can be used at more than 2 lakh outlets in India.
iv. Idea cellular and HDFC Bank launched two co-branded cards providing multiple benefits to customers of both.
v. Pillsbury Brownies with Nestle Chocolate.
vi. Dell Computers with Intel Processors.
Internet marketing, also referred to as online marketing, Internet advertising, or eMarketing, is the marketing of products or services over the Internet. Internet marketing also includes management of digital customer data and electronic customer relationship management (e-CRM) systems.
Tata Motors Rural Marketing:
Tata Motors recently rolled out a Customer Relationship Management (CRM) system, using Oracle’s Siebel CRM applications as a web-based centralised dealer management system, in 500 dealer outlets in India and abroad. With the successful implementation of CRM across 500 dealer outlets, Tata Motors is realising benefits throughout the organisation, including increased revenue, productivity and reduced costs stated a release issued by Oracle.
The CRM system helps Tata Motors serve customers more efficiently by drawing upon real-time, centralised customer and vehicle data. From storing this data in different systems, Tata Motors has moved over to using a single integrated system with CRM, it added.
Coca-Cola Rural Marketing:
With the help of Isha foundation Coca-Cola released the CD of the Coca-Cola Tamil CSR film “Nesa Karangal” and also acknowledged and appreciated Coca-Cola’s efforts in promoting social cohesiveness and sportsmanship with an aim to transform rural lives. Advertisements to attract the rural customers are Rani Mukherji acted in this advertisement and says “masti ka chataka”, Satish Shah’s maaza ad is also based on village background. Aamir Khan acted in the advertisement which showcases a beautiful village background with the punch line “thanda ka matlab Coca-Cola” and also ad title “soni kudi” targeted the villagers.
Pepsi Rural Marketing:
Pepsi Company India has entered into rural market by having joint programme with the Punjab Agriculture University in Ludhiana and Punjab Agro Industries Corporation in Chandigarh.
The programme focuses on evolving agricultural practices to help Punjab farmers produce crops that would make Indian products internationally competitive. To cultivate a range of sweet oranges for its Tropicana range. Apart from that, they have given advertisement to attract the rural people with the celebrity of Amitabh Bachchan and star cricketer Sachin Tendulkar.
What is Marketing – Impact: On Society as a Whole and On Other Businesses
Marketing’s Impact on Society as a Whole:
The American marketing system has been accused of adding to several “evils” in American society at large. Advertising has been a special target- so much so that the American Association of Advertising Agencies launched a campaign to defend advertising against what it felt to be common but untrue criticisms.
Another criticism is that business wields too much political power. “Oil,” “tobacco,” “auto,” and “pharmaceuticals” senators support an industry’s interests against the public interest. Advertisers are accused of holding too much power over the mass media, limiting their freedom to report independently and objectively.
One critic has asked – “How can Life and Reader’s Digest afford to tell the truth about the scandalously low nutritional value of most packaged foods when these magazines are being subsidized by such advertisers as General Foods, Kellogg’s Nabisco, and General Mills? The answer is they cannot and do not.”
American industries do promote and protect their own interests. They have a right to representation in Congress and the mass media, although their influence can become too great. Fortunately, many powerful business interests once thought to be untouchable have been tamed in the public interest.
For example, Standard Oil was broken up in 1991, and the meatpacking industry was disciplined in the early 1900s after exposures by Upton Sinclair. Ralph Nader caused legislation that forced the automobile industry to build more safety into its cars, and a surgeon General’s report resulted in cigarette companies putting health warnings on their packages.
More recently, giants such as – AT&T, Microsoft, and R.J. Reynolds have felt the impact of regulators seeking to balance the interests of big business against those of the public. Moreover, because the media receive advertising revenues from many different advertisers, it is easier to resist the influence of one or a few of them. Too much business power tends to result in counterforces that check and offset these powerful interests.
Critics have charged that the marketing system urges too much interest in material possessions. People are judged by what they own rather than by who they are. To be considered successful, people must own a large home, two cars, and the latest consumer electronics.
This drive for wealth and possessions hit new highs in the 1980s, when phrases such as – “greed is good” and “shop ’till you drop” seem to characterise the times. In the 1990s, although many social scientists have noted a reaction against the opulence and waste of the 1980s and a return to more basic values and social commitment, our infatuation with material things continues.
For example, when asked in a recent poll what they value most in their lives, subjects listed enjoyable work (86 percent), happy children (84 percent), a good marriage (69 percent), and contributions to society (66 percent). However, when asked what most symbolizes success, 85 percent said money and the things it will buy.
The critics do not view this interest in material things as a natural state of mind but rather as a matter of false wants created by marketing. Businesses hire Madison Avenue to stimulate people’s desires for goods, and Madison Avenue uses the mass media to create materialistic models of the good life.
People work harder to earn the necessary money. Their purchase increases the output of American industry, and industry in turn uses Madison Avenue to stimulate more desire for the industrial output. Thus, marketing is seen as creating false wants that benefit industry more than they benefit consumers.
These criticisms overstate the power of business to create needs, however. People have strong defences against advertising and other marketing tools. Marketers are most effective when they appeal to existing wants rather than when they attempt to create new ones.
Furthermore, people seek information when making important purchases and often do not rely on single sources. Even minor purchases that may be affected by advertising messages lead to repeat purchases only if the product performs as promised.
Finally, the high failure rate of new products shows that companies are not able to control demand.
On a deeper level, our wants and values are influenced not only by marketers, but also by family, peer groups, religion, ethnic background, and education. If Americans are highly materialistic, these values arose out of basic socialisation processes that go much deeper than business and mass media could produce alone.
Critics charge the marketing system with creating cultural pollution. Our senses are being constantly assaulted by advertising. Commercials interrupt serious programs; pages of ads obscure printed matter; billboards mar beautiful scenery.
These interruptions continually pollute people’s minds with messages of materialism, sex, power, or status. Although most people do not find advertising overlay annoying (some even think it is the best part of television programming), some critics call for sweeping changes.
Marketers answer the charges of “commercial noise” with these arguments – First, they hope that their ads reach primarily the target audience. But because of mass-communication channels, some ads are bound to reach people who have no interest in the product and are therefore bored or annoyed.
People who buy magazines addressed to their interests-such as – Vogue or Fortune-rarely complain about the ads because the magazines advertise products of interest. Second, ads make much of television and radio free to users and keep down the costs of magazines and newspapers.
Many people think commercials are a small price to pay for these benefits. Finally, todays’ consumers have alternatives. For example, they can zip and zap television commercials or avoid them altogether on many cable or satellite channels. Thus, advertisers are making their ads more entertaining and informative.
Business has been accused of overselling private goods at the expense of public goods. As private goods increase, they require more public services that are usually not forthcoming. For example, an increase in automobile ownership (private good) requires more highways, traffic control, parking spaces, and police services (public goods).
The overselling of private goods results in “social costs.” For cars, the social costs include traffic congestion, air pollution, and deaths and injuries from car accidents.
A way must be found to restore a balance between private and public goods. One option is to make producers bear the full social cost of their operations. For example, the government could require automobile manufacturers to build cars with even more safety features and better pollution control systems.
Auto makers would then raise their prices to cover extra costs. If buyers found the price of some cars too high, however, the producers of these cars would disappear, and demand would move to those producers that could support the sum of the private and social costs.
A second option is to make consumers pay the social costs. For example, a number of highway authorities around the world are starting to charge ‘congestion tolls’ in an effort to reduce traffic congestion.
Already, in Southern California, drivers are being charged premiums to travel in underused car pool lines; Singapore, Norway, and France are managing traffic with varying tolls; peak surcharges are being studied for roads around New York, San Francisco, Los Angeles, and other cities.
[Economists] point out that traffic jams are caused when drivers are not charged the costs they impose on others, such as delays. If the costs of driving are high enough, consumers will travel at nonpeak times or find alternative transportation modes.
Critics also charge that a company’s marketing practices can harm other companies and reduce competition. Three problems are involved – acquisitions of competitors, marketing practices that create barriers to entry, and unfair competitive marketing practices.
Critics claim that firms are harmed and competition reduced when companies expand by acquiring competitors rather than by developing their own new products. In the consumer packaged-goods industry alone during the past decade, R.J. Reynolds acquired Nabisco Brands; Philip Morris bought General Foods and Kraft; Proctor & Gamble gobbled up Richardson-Vicks, Noxell, and parts of Revlon; Nestle absorbed Carnation; Kimberly-Clark bought out Scott Paper Company; and Gillette grabbed Duracell.
These and other large acquisitions in other industries have caused concern that vigorous young competitors will be absorbed and that competition will be reduced. In vigorous young competitors will be absorbed and that competition will be reduced. In virtually every major industry-banks, electric utilities, railroads, telecommunications companies, hospitals, aircraft makers-the number of major competitors is shrinking.
Acquisition is a complex subject. Acquisitions can sometimes be good for society. The acquiring company may gain economies of scale that lead to lower costs and lower prices. A well-managed company may take over a poorly managed company and improve its efficiency.
An industry that was not very competitive might become more competitive after the acquisition. But acquisitions can also be harmful and, therefore, are closely regulated by the government.
Critics have also charged that marketing practices bar new companies from entering an industry. Large marketing companies can use patents and heavy promotion spending, and can tie up suppliers or dealers to keep out or drive out competitors. Those concerned with antitrust regulation recognize that some barriers are the natural result of the economic advantages of doing business on a large scale.
Other barriers could be challenged by existing and new laws. For example, some critics have proposed a progressive tax on advertising spending to reduce the role of selling costs as a major barrier to entry.
Finally, some firms have in fact used unfair competitive marketing practices with the intention of hurting or destroying other firms. They may set their prices, below costs, threaten to cut off business with suppliers, or discourage the buying of a competitor’s products. Various laws work to prevent such predatory competition.
It is difficult, however, to prove that the intent or action was really predatory. For example, in recent years, Wal- Mart and American Airlines have been accused of predatory pricing-setting prices that could not be profitable in order to drive out smaller or weaker competitors. The question is whether this was unfair competition or the healthy competition of a more efficient company against the less efficient.
What is Marketing – 8 Important Managerial Functions: Determining the Marketing Objectives, Planning, Coordinating, Organising, Staffing, Controlling and a Few Others
The marketing management has to perform the various managerial functions such as planning, organisation, directing, controlling and coordinating etc.
In short, the marketing management has to perform the following managerial functions:
Function # 1. Determining the Marketing Objectives:
The first primary function of marketing management is to determine the marketing objectives or goals. Marketing goals may be short term or long term. Long-term objectives are not much clear such as – capturing the market may be a long term goal but they fail to guide the marketing manager in planning his programmes. On the other hand, short term objectives are definite and clear.
Function # 2. Planning:
The marketing manager has, to forecast the sales for the next session prepare marketing programme, formulate policies regarding production, brand, price credit, advertisement, challenges of distribution etc., to achieve the objectives.
Function # 3. Coordinating:
All activities of an enterprise should be coordinated in such a manner that they can present a picture of unified unit and the objectives of the organisation may be attained in a better way.
The activities of marketing management, i.e., sale forecast, product planning and development, market research, sale, advertising, sales promotion, transport, etc., should be integrated so that they are untidily can show the best results for the organisation. Apart from this, coordination among activities of various departments should be maintained.
Function # 4. Organising:
Various activities and persons assigned those activities, are arranged in such a way so as to attain the marketing objectives efficiently. For this purpose, organisation structure of the marketing department is determined. Power and duties and responsibilities of various authorities and their interrelations are also determined.
Function # 5. Operating and Directing:
Marketing manager is also responsible not only for planning and organising the activities but also for guiding and supervising the subordinates. Marketing manager is the leader of the department and of the subordinates working under his leadership. He should motivate the subordinates through his leadership so that subordinates work sincerely to attain the marketing goals.
Function # 6. Staffing:
Marketing manager recruits and selects the efficient marketing force. He also arranges for their training and formulates policies regarding their remuneration. Marketing manager may seek the experts’ advice of personnel manager in making the recruitment and selection of the marketing staff.
Function # 7. Controlling:
Controlling is the last but not the least important function of the management. Marketing manager fixes the sale standards for each of the market and for the individuals, analyses their actual performance, compares actual performance with these standards and takes corrective actions wherever necessary. If deviation is positive, he tries to maintain it and if it is negative, he identifies the causes and removes them.
Function # 8. Analysing and Evaluating:
The marketing manager should collect the data regarding sales and other market activities in an explicit manner. He should also analyse and evaluate the performance of various plans and projects so that he may be sure how far the marketing goals have been accomplished.
For this purpose he can analysis:
(a) The results of net sales and marketing costs, area-wise, product- wise, product-line-wise, and customer-wise. A comparative study may be made of various areas, products and product lines and customers and important decisions may be taken in the light of such analysis. Uneconomic product-lines, markets or customers may be dropped or a new strategy should be developed to conform the marketing and the organisation objectives. In this way he will be successful in increasing the profits of the concern by utilising the resources to the maximum extent;
(b) The performance of individual salesman and evaluate their productivity or efficiency;
(c) Advertising programmes and evaluate their effects on the company’s sale; and
(d) Evaluate the performance of various middlemen and he may be aware of the tastes, fashion, behaviour and nature of the customers.
What is Marketing – Philosophy and Implications
Marketing as a Business Philosophy:
The word marketing has two distinct meanings in terms of modern management practice.
(a) The specific specialist functions of marketing carried out within many organisations
(b) An approach or concept which can be used as the guiding philosophy for all the activities of an organisation.
This concept is one area where marketing touches every part of an organisation. Peter Drucker once wrote, ‘There is only one valid definition of business purpose – to create a customer.’ At its simplest, if you do not have any customers for the product or service your organisation offers, then there is no reason for continuing existence.
As far back as 1776, Adam Smith, the father of modern economics wrote:
Everyone in an organisation should be required to understand the final customer for their efforts, and thus to have a customer focus in their job. A marvellous article by N W (Red) Pope entitled Mickey Mouse Marketing looked at the success of the Walt Disney organisation.
Disney have a very positive attitude and their own terminology. At Disney, if your job has you interfacing with the public (customers) in any way whatsoever, you are ‘on stage’. If your work is not public interfacing, you are ‘back-stage’. One is not better than the other. That is emphasised. No little insignificant jobs. It takes many people, doing many types of jobs, to ‘put on the show’.
Disney know that the way to successful shows is centred on satisfying the paying public. The recent launch and initial results for EuroDisney could show that the organisation has forgotten some of the lessons known to the late Walt Disney. However, it will be interesting to watch the changes made to EuroDisney to see how they respond to their current problems and improve the benefits to the paying public.
While Adam Smith was concentrating on manufactured products, in the case of the Disney organisation the ‘product’ is less tangible – perhaps it is the enjoyable experience when visiting Disneyland. The marketing concept can be extended further into all kinds of ‘products’. For instance, a charity such as Save the Children Fund also markets itself.
The ‘product’ is the feeling you have after making a donation, so that even in this situation a real exchange is taking place between the giver and the charity.
The relevance of a marketing approach to activities and sectors that are far-removed from the stereotype ‘cornflake’ market… the marketing concept may have been spawned in the FMCG (fast moving consumer goods) field, but it has in recent years gained currency in both the industrial and service field, the public sector and the voluntary sector.
If ‘customers’ are those that use, consume, buy or recommend a product or service, then clearly most organisations will need to maintain customer relationships, often with a variety of different customers. Customers come in many different guises and may be described differently by organisations in different fields. The broad common factor is that they require special treatment from the provider. A customer-orientated approach can therefore apply equally to a food manufacturer or a public sector organisation.
There are two implications of the marketing concept as a focus for an organisation. First, it encourages organisations to ask the right questions, and second, it assists the integration of company activities.
An organisation will initially ask the basic questions:
i. Where are we now?
ii. Where do we want to get to?
iii. How do we get there?
Obviously the analysis of current position is vital, but it is important to consider such issues for the future and not be obsessed with the past. A marketer will ask questions specifically aimed at the future, and place them firmly from the customers’ perspective.
The questions asked by a marketer will therefore be:
i. Who are our existing/potential customers?
ii. What are their current and future needs?
iii. How can we satisfy these needs?
a. Can we offer a product/service the customer would value?
b. Can we communicate with customers?
c. Can we deliver a competitive product or service?
iv. Why should customers buy from us?
It is the responsibility of marketing management to find answers to these questions, and thereby develop solutions to market needs, within the constraints of the organisation’s resources and policies. Especially important is the final question, which recognises that customers in most markets have many products from which to choose.
What is Marketing – Future
Marketing continues to grow in both importance and complexity. As a result, the marketing profession will be even more challenging in the years ahead. Flare’s a quick look at what marketing people will face in the coming decade.
Information presents a mixed blessing for marketers. On one hand, the amount of marketing data available will continue to increase. You’ll be able to pinpoint buyers and their buying habits more accurately than ever before. This should open the door for more efficient marketing because less money is wasted talking to people who aren’t listening. On the other hand, you’ll have to be more sensitive to the information overload suffered by your weary customers.
Mass marketing is gradually being replaced by “micromarketing” in many industries as companies target groups of customers that are smaller and more focused. For example, some years ago everybody wore plain, old sneakers; the big choice was whether to buy high-top or low-top.
In either case, they were made of canvas-and it was black canvas, period. Now consumers can choose specific shoes for walking, jogging, running, aerobic exercising, and other athletic endeavours. Sport shoes come with built-in airbags, and some shoes come with three pairs of laces.
Customers will continue to demand individualised products for their special needs, and companies will continue offering a wider variety of highly specialised products.
Like to travel? The global dimensions of the marketing profession will become increasingly important in the next century. In addition to learning foreign languages, you’ll be pressured to learn about various cultures, business practices, and government influences in countries all over the world. Even if you can’t learn the languages, you’ll need to be aware of cultural subtleties and legal forces at the very least.
Marketers in the 1990s have some impressive new promotional tools at their disposal. Interactive television will let viewers talk back to their TV sets, allowing them to select specific commercials, receive coupons, and order products without having to reach for the phone.
Advertisers could test potential commercials and ask for viewer’s opinions right on the spot. And don’t forget that innocent Nintendo game sitting in your family room. If Nintendo has its way, you’ll soon have that game console connected to both your television and your telephone, using it to order merchandise, make bank transactions, and manage your stocks and bonds.
Meanwhile, the home computer has -already turned into an advertising platform. The Prodigy service, a joint venture of IBM and Sears, scrolls advertisements along the bottom of your computer monitor while you’re reading the on-line version of Consumer Reports or scanning the current U.S. weather map.
In addition to these professional topics, an increased awareness of ethical issues should be on every marketer’s agenda for the coming decade. This includes both an understanding of what constitutes unethical marketing and a grasp of ethical dilemmas that pit the desires of companies against interests of individual consumers or society as a whole.
Now add up all these changes. The twenty-first-century marketing professional will need to have the analytical capacity to handle increasing amounts of data, the creative talents to define products and develop messages for a crowded marketplace, and the social awareness to navigate in complex global markets.
Add a strong dose of technological knowledge and ethical sensitivity, and you’ll have a pretty good idea of what the marketing challenge will look like in the next century.
What is Marketing – Criticism
Marketing is under attack, especially when the effort is aimed at catching the fish, when the gullible public is taken for a ride by clever manipulation, and twisting of facts. Let us examine the dark side of marketing more closely.
Responsible marketers discover what their consumers want and respond with the right products at right price in order to give good value to buyers, and profit to the producer. The marketing concept is a philosophy of customer satisfaction and mutual gain. Not all marketers follow the marketing concept; however private transactions may involve larger questions of public policy (i.e., the illustration of the sale of cigarettes).
Important criticisms against marketing may be listed as follows:
Many critics argue that marketing efforts enhance the prices of products and services:
i. High Costs of Distribution:
Greedy intermediaries mark up prices beyond the reach of common man. Wholesalers, retailers, agents drive up the prices, depending on the demand-supply mismatch.
ii. High Advertising and Promotion Costs:
Marketing is accused of driving up promotion and advertising costs. To create brand awareness, to generate interest, and to woo customers away from competing brands, marketers have to spend heavy amounts in the form of promotional expenses—apart from heavy advertising.
iii. Excessive Mark-ups:
Critics also point out that companies initially jack up prices to cover their start-up costs and research and development costs as well—if there is any element of novelty and specialness in the products or services. Even if novelty is missing, they try to carry out some cosmetic changes to the existing products and try to market them as brand new varieties. Such tactics by shady marketers have worsened the situation in recent times. If every marketer tries to catch the fish, the field is going to get only a bad name.
iv. Deceptive Pricing:
Marketers are sometimes accused of deceptive practices that lead the consumers to believe that they will get more value than they actually do.
Three groups exist with respect to these alleged practices – (a) Deceptive pricing, includes such practices as falsely advertising ‘factory’ or ‘wholesale’ prices, or a large reduction from a phony high list price, (b) Deceptive promotion includes such practices as overstating the product’s features or performance, luring the customer to the store for a bargain that is out of stock, or running rigged contests, (c) Deceptive packaging includes exaggerating the package contents through subtle design, not filling the package to the top, using misleading labelling, or describing the size in misleading terms.
Deceptive practices have led to legislation and other consumer protection actions. Marketers argue that most companies avoid deceptive practices because such practices harm their business in the long run. According to some experts, some puffery, however, will always occur.
v. Shoddy and Unsafe Products:
Shoddy or unsafe products are another criticism levelled against the marketers. Complaints include – (a) Complaints about products not being made well or services were not performed well, (b) Products deliver little benefit, (c) Product safety has been a problem for several reasons – (1) manufacturer indifference; (2) increased production complexity; (3) poorly trained labour; and (4) poor quality control. Responses to these complaints from marketers are positive. Marketers in general want to make beneficial and safe products.
vi. Planned Obsolescence:
Planned obsolescence is a strategy of causing products to become obsolete before they actually need replacement and is a criticism levelled by consumers. Fashion is often cited as an example here. Marketers respond by saying that consumers like lifestyle changes; they get tired of old goods and want a new look. Much of the so-called planned obsolescence is actually the normal interaction of competitive and technological forces in a free society.
vii. Poor Service:
In contemporary society, poor service to disadvantaged consumers is another criticism against marketing. Clearly, better marketing systems must be built in low-income areas. Critics believe the poor have been exploited by marketers.
Some criticisms have also been levelled at marketing because of its perceived negative impact on society as a whole.
Criticisms include marketing creating:
i. False Wants and Too Much Materialism:
People are judged by what they own rather than who they are. This criticism perhaps overstates the power of business to create needs. Our needs are influenced by other forces than just marketing needs. Some even see materialism as a positive force.
ii. Producing Too Few Social Goods:
There needs to be more of a balance between social (public) and private goods, areas an alternative, the government can ask that more safety be built into products (autos, for example), or make the consumers pay the social costs.
iii. Cultural Pollution:
There are constant assaults on the privacy of customers. Customers are compelled to take note of the noise created by television and radio advertisements. The minds of customers get polluted when they are bombarded with advertisements relating to products that customers cannot afford and do not require. Marketing forces customers to discard products that still have functional utility—simply because the manufacturer has come out with a new version of the same products (such as – cell phones, televisions, music systems, laptops, etc.).
iv. Too Much Political Power:
Companies do promote and protect their own interests. They have a right to. Counter forces are in place to offset business promotional and political power.
v. Impact of Marketing on Other Businesses:
Critics charge that a company’s marketing practices can harm other companies and reduce competition.
Three problems are involved:
a. There may be too many of these activities – According to some, acquisition is a complex subject, however, and sometimes acquisition may be good for society.
b. Marketing practices that create barriers to entry – Patents and heavy promotional spending are often cited.
c. Unfair competitive marketing practices – Predatory competition is dangerous to the overall well-being of the economy. To distinguish between what is predatory and what is healthy competition is often difficult.