Everything you need to know about marketing management. Marketing Management performs all managerial functions in the field of marketing.
Marketing Management identifies market opportunities and comes out with appropriate strategies for exploring those opportunities profitably.
It has to implement marketing programme and evaluate continuously the effectiveness of marketing-mix. It has to remove the deficiencies observed in the actual execution of marketing plans, policies, and procedures. It looks after the marketing system of the enterprise.
Management is the process of getting things done in an organised and efficient manner. Marketing management aims at efficient operation of marketing activities.
Marketing management smoothen the process of exchange of ownership of goods and services from seller to the buyer. Marketing management, like all other areas of management comprises of the function of planning, organising, directing coordinating and controlling.
Learn about:- 1. Definition of Marketing Management 2. Marketing Concept 3. Features 4. Importance 5. Functions 6. Process 7. Scope 8. Marketing Mix 9. Marketing Decision Making 10. Orientation 11. Issues.
What is Marketing Management: Introduction, Definition, Concept, Importance, Functions and Process
- Introduction to Marketing Management
- Definition of Marketing Management
- Marketing Concept
- Features of Marketing Management
- Importance of Marketing Management
- Functions of Marketing Management
- Process of Marketing Management
- Scope of Marketing Management
- Marketing Mix
- Marketing Decision Making
- Marketing Management Orientation
- Issues of Marketing Management
What is Marketing Management – Introduction
In considering how the individual selling unit in the marketing system operates, we will investigate the question- What is marketing management? Some readers will be students who intend to be in marketing management, others already are marketing managers, and still others may be in related activities that bear on marketing management in either a managerial or a regulative capacity.
To meet all their needs our main objective is to develop a structure, a “theory”, of managerial marketing around which they can organize their reading and experience in order to arrive at a better understanding of it.
This understanding can serve two objectives. First, it will help them obtain new insights from the experiences they will be acquiring on the job in the future. Inevitably they will develop from experience some such structure to serve this crucial need anyway, so they can profit from new experience and new knowledge. To acquire such a structure from experience alone, however, is a slow and often uncertain process. Formal education can help them to speed this up so they grow in marketing skill much faster.
Second, understanding of marketing management will permit a better grasp of the role of marketing in economic development, which many countries are so earnestly seeking. This structure is culture- free and can be applied to any environment. In general, study of marketing management leads to a better evaluation of marketing activity in terms of its performance in meeting the consumer’s needs.
Marketing management is the process of decision making, planning, and controlling the marketing aspects of a company in terms of the marketing concept, somewhere within the marketing system. Before proceeding to examine some of the details of this process, comments on two aspects will be helpful background.
The marketing concept is simple in principle but often very difficult, if not impossible, to fully implement. Adam Smith’s comment cited above is most consistent with it. The concept is that a company can more effectively serve its own objectives if it will integrate the various aspects of its marketing activities explicitly so as to meet the preferences of its customers.
To one unfamiliar with company practice the need for implementing the concept and the capacity to do it would seem to be so obvious as not to merit discussion.
This process of marketing management takes place “somewhere” within the marketing system. Having seen the marketing system portrayed, you know that “somewhere” can be within any of the many, many companies—manufacturing, wholesaling and retailing—that make it up. Marketing management is practiced in every one of them.
Assume, to simplify, that we are concerned only with the manufacturing level in a direct sense because the manager we are considering occupies a marketing management position there.
What is the nature of each of the three elements making up the marketing management process – decision making, planning, and control?
What is Marketing Management – Definition: Provided by Institute of Marketing Management and Philip Kotler
Traditionally, markets were viewed as a place for exchange of goods and services between sellers and buyers to the mutual benefit of both. Today, marketing is exchange of values between the seller and the buyer. Value implies worth related to the goods and services being exchanged. The buyer will be ready to pay for the goods if they have some value for him.
Marketing is the business function that controls the level and composition of demand in the market. It deals with creating and maintaining demand for goods and services of the organization.
Marketing management is “planning, organising, controlling and implementing of marketing programmes, policies, strategies and tactics designed to create and satisfy the demand for the firms’ product offerings or services as a means of generating an acceptable profit.”
It deals with creating and regulating the demand and providing goods to customers for which they are willing to pay a price worth their value.
Marketing Management performs all managerial functions in the field of marketing. Marketing Management identifies market opportunities and comes out with appropriate strategies for exploring those opportunities profitably. It has to implement marketing programme and evaluate continuously the effectiveness of marketing-mix. It has to remove the deficiencies observed in the actual execution of marketing plans, policies, and procedures. It looks after the marketing system of the enterprise.
Institute of Marketing Management, England, has defined Marketing Management as “Marketing Management is the creative management function which promotes trade and employment by assessing consumer needs and initiating research and development to meet them. It co-ordinates the resources of production and distribution of goods and services, determines and directs the total efforts required to sell profitably to ultimate user”.
According to Philip Kotler, “Marketing Management is the art and science of choosing target markets and building profitable relationship with them. Marketing management is a process involving analysis, planning, implementing and control and it covers goods, services, ideas and the goal is to produce satisfaction to the parties involved”.
From the above definitions, we can conclude that Marketing Management is the process of management of marketing programmes for accomplishing organizational goals and objectives.
Marketing Management Involves:
1. The setting of marketing goals and objectives,
2. Developing the marketing plan,
3. Organising the marketing function,
4. Putting the marketing plan into action and
5. Controlling the marketing programme.
Marketing Management is both a science as well as an art. Those responsible for marketing should have good understanding of the various concepts and practices in marketing, communication, and analytical skills and ability to maintain effective relationship with customers, which will enable them to plan and execute marketing plans.
Continuous practice in the areas of personal selling, sales promotion, advertising, etc. would enable them to become artists. Scientific and artistic aspects of marketing would influence each other, leading to a new generation of marketing managers.
What is Marketing Management – Concept
This concept advocates that a manufacturer should begin his task with the consumer focus. He has to primarily study the consumer and understand the needs, desires, requirements and conveniences of the latter. A manufacturer should design a new product or improve an existing one strictly keeping in mind the needs, desires etc. of the consumer. The product should exactly satisfy the consumer.
Therefore, a manufacturer should design and manufacture a product which will be accepted by the consumer rather than the one which can be manufactured by him easily. A consumer is basically fastidious and fickle minded. This makes that task of understanding the consumer and designing an appropriate product much more difficult, however this is the only way a manufacturer can succeed in a competitive market.
Selling should be preceded by customer study, marketing research and product development. The entire focus should be on the consumer and his needs.
“There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the consumer so well that that the product or service fits him and sells itself. Ideally marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available” – Peter Drucker.
This concept is also called customer orientation.
The marketing concept which is also called the modern marketing concept as practised by most of the firms in the present situation is actually a combination of all the other concepts. The modern marketing concept consists of an integrated effort on the part of the marketer to identify the consumer needs and satisfy them through appropriately designed products and for this task use all the marketing techniques related to product, selling, market study, consumer behavior, product designing, pricing etc.
“The Marketing concept is a customer orientation backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying organizational goals”. – Philip Kotler
“Modern marketing concept is a corporate state of mind that insists on the integration and co-ordination of all marketing functions which in turn are welded with the other corporate functions for the basic objective of producing maximum long range corporate profits.” -Felton
The following are the features of marketing concept (modern marketing concept, integrated marketing concept, customer orientation):
i. Focus on customer needs – The needs of the consumer are studied and these become the basis of all product related activities such as designing, pricing, distribution, packaging etc.
ii. Providing consumer satisfaction – Every organization aims at providing maximum consumer satisfaction by understanding his needs and designing an appropriate product. The success of an organization is directly related to the consumer satisfaction it provides.
iii. Integrated Marketing Management – Marketing management is only a part of the total managerial functions of an organization such as finance management, production management, human resources management etc. All these functions are integrated in order to provide maximum satisfaction to the consumer. Thus all the functional areas of an organization are integrated.
iv. Achieving organizational goals – Modern marketing states that an organization must aim at maximizing consumer satisfaction and in the process enable itself to achieve its goals such as growth, market share and reasonable amount of profit or return on investment.
v. Innovation – Innovation is an important tool to provide consumer satisfaction. Innovative methods must be used to understand the consumer, design an appropriate product and offer it to the consumer.
What is Marketing Management – Features: Managerial Process, Consumer Centric, Research Analysis, Planning and Development and a Few Others
Marketing management is a managerial process involving planning, organising, decision making, forecasting, directing, coordinating and controlling. Stanley Vance defines management as the process of decision making and controlling. Every aspect of marketing, starting with identifying the consumer’s need and wants, identifying the targeted customer, product planning, development, pricing, promotion, distribution process requires planning, decision making, coordination and controlling.
All marketing activities are consumer centric. The consumers are the king. Marketing activities are based on the premise of “make what the market wants”. The principal objective of marketing is to create new customers and to retain current customer. Marketing management performs the task of converting the potential customers into actual customer.
This is possible through satisfaction of customer’s needs and wants by delivering them, appropriate goods and services according to their needs and wants, at right time and through convenient channel.
The basis function of marketing is identification of consumer’s needs and wants .This requires continuous and systematic collection of data, analysis and reporting of data relevant to marketing activities. This helps the management to understand consumer’s needs, wants, preferences and behaviour of the consumer towards firm’s marketing mix strategies. This helps in forecasting and planning future course of action.
Marketing involves planning and development of goods and services. Organizations make a continuous endeavour towards planning, development and innovation of product and services so as to meet the changing demand, taste and preferences of the consumers.
Marketing activities are not just selling and distribution of ownership of goods and services from the producer to the ultimate consumer. But it involves a series of activities like research analysis, production, development and innovation, advertisement and promotion pricing decision, selling and distribution, customer relationship and after sales service.
All these functional areas of marketing must be effectively planned, organised and built effectively to achieve best results. Marketing structure depends upon the size of the enterprise, geographical coverage of the operation, number of product lines, nature of product, size of customers.
All marketing activities are based on overall organisational objectives. The marketer bridges the gap between overall organisational objectives of achieving high profit and maximization of sales and consumer’s interest of satisfying needs.
The ultimate objective of a firm is to maximise sales volume and profit. This can be achieved through promotion and communication about the goods and services. This function of marketing management enables the firm to provide information about the product to the customers.
Marketing management performs the function of controlling of marketing activities. Marketing management evaluates the effectiveness of marketing activities, to judge the efficiency of marketing personnel and the plans. This process involves measuring the actual performance with the standard and identifying the deviations and taking corrective actions.
What is Marketing Management – Importance: Analysing Market Opportunities, Determination of Target Market, Planning and Decision Making and a Few More
Marketing management smoothen the process of exchange of ownership of goods and services from seller to the buyer.
Marketing management collects and analyses information related to consumer’s needs, wants and demands, competitor’s marketing strategies, changing market trends and preferences. This helps to identify market opportunities.
Marketing management helps to identify the target market that the organization wishes to offer its product.
Marketing management helps to prepare future course of action. Planning relates to product introduction, diversification. Decision making regarding pricing, selection of promotional mix, selection of distribution channel is taken by the marketing management.
Consumers determine the future of the market .Therefore providing the best product to the consumer according to their preference is the important task of marketing. Marketing management helps in creation of new customers and retention of current customers.
Marketing caters to the varied and unlimited needs of consumers. Marketing management helps to increase profit and sales volume. This is achieved by expansion of market and increasing customers.
Marketing management aims at providing innovative product and services to the customers. Marketers continuously strive to incorporate new technology and mechanism in their product to provide more satisfaction to customers than before. This improves quality of life and makes life of consumers easier than before.
Marketing process is a combination of different activities like research work to assess the marketing environment, product planning and development, promotion, distribution of product to customers and after sales service. Marketing process requires researcher, production engineer, different distribution intermediaries, sales personnel also creates employment opportunities in advertisement section. Thus marketing management opened up different employment avenues thus creating employment opportunities.
What is Marketing Management – Functions: Assessing the Marketing Opportunities, Planning the Marketing Activities, Organising the Marketing Activities and a Few Others
Marketing is related to markets and therefore marketing management calls for integration of the various elements of market. It has the task of organising these elements into an effective operating system so that it can serve both customer and business enterprise effectively.
Various functions of marketing management are:
Determination of marketing objectives and assessment of the marketing opportunities for the firm, is an important function of marketing management. The constantly changing market conditions and opportunities make it imperative for the marketing management to come out with planned progammes to meet the challenges, and reap the opportunities.
Planning is an important managerial function. Planning of marketing activities is a crucial task and involves numerous steps. It involves planning effective strategies to achieve the desired marketing objectives. It is concerned with formulation of policies relating to product, price, channels of distribution, promotional measures, forecast of target sales etc. Planning provides the basis for an effective marketing for the enterprise.
Another significant function of marketing is organising it implies determination of various activities to be performed and assigning these activities to right person, so that marketing objectives are achieved. In the light of the changing concept of marketing, it is necessary that the organisation structure is flexible and accommodative. This will help in better interaction between organisation and environment.
Even the best of planning will not be rewarding if there is improper coordination between different activities of the organisation. Marketing involves various activities and these are inter-related and interdependent. Product decisions, pricing strategies, channel structure research activities all require proper coordination. Only then the objectives can be achieved.
A good direction is a must for effective performance of marketing functions. Direction helps in rightful performance of the work. Different leadership style are practised to guide the subordinates. A leader directs his subordinates and ensures through effective supervision, that the performance is as per planned specification. At the same time, it is necessary that employers are properly motivated. Motivation not only helps in better performance by the employee but also holds him back to the organisation for longer periods.
These days organisations are very serious as far as their motivation policies are concerned. New ways of motivation are being introduced so that the employee gives his best of services.
6. Evaluating and Controlling Marketing Efforts:
In order to have a profitable venture, marketing manager must on a continuous basis, evaluate the marketing efforts. This will help him in knowing the deficiencies if any, which can be corrected beforehand only and proper adjustments can be made with the changing environment. Controlling is a managerial function concerned with comparison of actual performance with the standard performance and locating the shortcomings if any, finally corrective measures are taken to overcome the shortcomings.
What is Marketing Management – Process
Marketing Management process involves the following:
1. Managerial marketing process starts with the determination of mission and goals of the entire enterprise and then defines the marketing objectives to be accomplished.
2. Evaluate corporate capabilities on the basis of our strengths and weaknesses.
3. Determine marketing opportunities which have to be capitalised. We have to identify and evaluate unsatisfied and potential customers’ needs and desires. Market segmentation will enable us to select target markets on which we can concentrate our efforts. Marketing opportunities are influenced by marketing environment, competition, government policies, mass-media, consumerism, public opinion, distribution structure, etc.
4. Once the company has full information regarding marketing opportunities, they can formulate marketing strategies in the form of dynamic action-oriented formal plans to achieve mission, goal, and objectives. A strategy is a pattern of purposes and policies, a planned course of action in pursuit of clearly stated objectives in the face of limited resources, and intelligent competition.
Marketing strategy points out the level, mix, and allocation of marketing efforts in marketing action plans. The company has appropriate marketing-mix for each target market. The marketing-mix is expected to sell more than competitors.
5. Marketing action plans or programmes are to be implemented through proper communication, coordination as well as motivation of marketing personnel.
6. Performance according to plan is duly assured by effective marketing control. An effective control system is essential to measure and evaluate the actual results of the marketing strategy. The results are evaluated against our desired objectives. Feedback of evaluation enables marketing management to revise, adopt, or modify goals and objectives and replan on the basis of feedback of evaluation.
7. Marketing process is on-going or dynamic and it must adapt itself to the ever-changing environmental needs.
1. Marketing programme starts from the product concept and it does not end until customer wants are adequately satisfied.
2. Profitable sales over the long-run and repeat-purchase by customers are vital to success in marketing.
3. Marketing research and marketing information service alone can act as effective tool in all decisions of Marketing Management
4. Marketing policies cover marketing analysis and research, product analysis, marketing channels, personal selling, sales promotion and advertising, pricing and non-price competition.
What is Marketing Management – Scope: Marketing Research, Determination of Objectives, Planning Marketing Activities, Pricing of Product and a Few Others
Marketing management, like all other areas of management comprises of the function of planning, organising, directing coordinating and controlling.
Marketing research involves identification of needs, wants taste and preferences of the targeted customer. Marketing management conducts a continuous analysis of consumer’s behaviour towards firm’s marketing mix strategies, business environment; competitor’s marketing strategies in order to plan effectively the marketing activities of future.
Marketing management performs the task of setting marketing objectives. The marketing objectives are set in accordance with the overall organisational objectives of profit maximization. Marketing objectives relates to attracting new customers, retention of current customer, expansion of customer base, introduction of new product, improvement of old product and so on. Marketing management aims at maximising the customer’s value by providing high satisfaction to the customers.
Planning involves determining the future course of action. Planning helps in accomplishment of objectives in a systematic manner. Planning of marketing activities relates to determining product line strategies, planning for product diversification, advertisement and promotional activities, planning related to selling and distribution process.
Planning may be conducted on short term, medium term and long term basis depending upon the requirements. Plans should be flexible so as to adjust with the changing business environment.
Product is the basic element of marketing. Products are goods or services that are offered to the customer for satisfying their needs and wants. Products are customer oriented and offered to the customer’s as per their requirement and preferences. Product planning involves new product development, product innovation, product diversification plan.
Pricing is a complex function of marketing management. In most of the cases prices form the decision making criterion for purchase decision. Pricing decisions are based on cost of the manufacturing and distribution of product, competitor’s pricing strategies, customer’s willingness to pay for the product, customer’s perception about the product.
Promotion and advertisement are essential in order to maximise sales. Promotion and advertisement is essential to provide information to the customers about the product, to attract new customers, to provide reminder to customers about the product and to continue purchase, to provide information about product improvement or introduction of new brand. Marketing management develops new techniques and tools for promotion of their product.
Distribution process facilitates easy availability of goods and services to the customers at right time and at right and convenient location. Selection of distribution channel depends upon the nature of the product, price of the product, availability of intermediaries for distribution and cost involved in the distribution process.
Marketing management performs the task of evaluation and controlling of the marketing activities. Evaluation enables identification of effectiveness of marketing plans and actions.
What is Marketing Management – Marketing Mix: Product Mix, Pricing Mix and Promotion Mix
The marketing manager makes marketing plans within the framework of controllable and non-controllable variables. The non-controllable variables are social, technological, political, cultural and legal factors which affect the marketing strategies. Controllable factors are the product, price, promotion and channels of distribution. Marketing mix is the combination of four controllable variables that make a successful marketing programme.
(a) Product Mix:
It deals with physical attributes of the product and the benefits associated with use of that product. Ownership of the product gives a sense of pride and satisfaction to the consumer and, therefore, the product should be properly designed, coloured and packed.
(b) Pricing Mix:
Pricing is an important decision made by the marketing manager. While pricing a product, managers consider factors such as costs, legal framework, prices charged by competitors and the prices that consumers are ready to pay. Managers must price the product to recover the costs and earn a reasonable return on capital. This ensures long-run survival and growth of the enterprise.
(c) Promotion Mix:
It refers to firm’s communication with the consumers regarding the product. It motivates them to buy the goods.
Sales can be promoted in three ways:
It presents the product details to consumers through media. It is a non-personal means of communication.
(ii) Personal Selling:
The seller directly contacts the buyer and convinces him to buy the goods and services.
(iii) Sales Promotion:
It supplements advertisement and personal selling as a means of promoting sales. It increases sales by holding contests, lotteries etc.
Different combinations of sales promotion techniques can be used at a point of time.
(d) Channel Mix:
After the product is designed, priced and advertised, it arouses consumers’ interest to buy it. The channel mix identifies the path or the route through which goods are transferred from sellers to buyers. The seller may sell directly to the buyer or through intermediation of wholesalers and retailers. More than one channel of distribution can be adopted at the same time; for example, a wholesaler can sell through retailers and also directly to consumers.
The channel mix not only selects a channel of distribution, it also maintains it to ensure consistency in the selling practices followed by the sales people.
What is Marketing Management – Marketing Decision Making: Product Variation, Marketing Channels, Prices and Promotion
The manager makes decisions about things he can control—the controllable. In very general terms, what does he decide? Roughly, he decides the kind of a product to produce, the kind of a distribution system to use, the price to charge, advertising messages and media, and the salesmen’s message to customers on whom they call.
In making these decisions he learns from experience to use an operating principle which simplifies his task and avoids substantial frustration. It might be called the “law” of marketing management, like other rules of behaviour such as Aristotle’s Golden Mean and the Golden Rule.
This “law” of marketing management states- Since some things are controllable and others are not, separate the controllable from the uncontrollable and don’t waste your time and energy trying to change the uncontrollable. Rather attempt to understand it so you can adapt the controllable to the uncontrollable in such a way as to satisfy your company’s needs as effectively as possible. The application of this law is an art in which analytic tools from science can aid.
As suggested by the discussion of the marketing system, there is a complex of more or less uncontrollable forces operating on the manager. These can be summarized, as in the outer hexagon of Figure 6, as competition, demand, non-marketing cost, structure of distribution, public policy, and company organization. Underlying these are, of course, the much more fundamental forces of technological, social, political,
The inside pentagon of Figure 6 portrays the controllable elements, the ones about which the marketing manager can decide. The art of marketing management is the effective adaptation of these elements to the uncontrollable in the marketing environment so as to optimize the company’s welfare. This optimum welfare can be thought of as the maximum area attainable in the inner pentagon within the constraints of its environment, the outer hexagon.
With Figure 6 for perspective, we will first examine each of the controllables.
These relate to:
(1) Product or service variation,
(2) Selection and management of marketing channels for distributing the product,
(3) Setting prices, and
(4) Fixing and allocating the promotional budget to advertising and selling.
(1) Product Variation:
A company’s modification of the nature of its offering is achieved through product and service decisions which are essentially of two types. Some decisions are concerned with change of an existing product to conform more nearly to the demands of the market. These changes may be superficial or fundamental (for example, the use of a new package as opposed to a revolutionary redesign of the product).
Other decisions concern dropping or adding an item to the product line. These decisions of product change and change in product line are common, since few companies in the United States produce a single product. They are also serious decisions for most firms. A marketing manager must be constantly on the alert to exploit new-product opportunities and to avoid continuing an unprofitable item.
(2) Marketing Channels:
All companies must choose the set of channels they think will be most effective. The possibilities, as we have seen, are almost unlimited. Selecting the correct channel requires careful analysis, particularly since the decision usually involves a heavy investment of time by managers and salesmen and goes far in fixing the rest of the marketing plan for some time into the future.
The spatial aspects of the structure of distribution, for example, the geographical concentration of buyers in each market, will make a great difference in determining the best set of channels for a particular situation.
Prices must be set. Competitors’ prices typically establish significant limits to the range of choice, but there is usually some discretion. There are many pricing problems. Not only must a number of products be priced, but if a marketing channel other than direct-to-user is employed, consideration must often be given to the prices set at each level of the marketing channel. Finally, some buyers may receive a different price (or discount as it is usually called), based on such factors as the quantity they purchase.
Most companies must use some type of promotional effort. The function of both types of promotion—advertising and personal selling—is to provide potential buyers with information about the product—its quality, its availability, and its price. A salesman may well perform other functions, such as delivery and repair, but, to simplify he will be viewed here as a conveyer and receiver of information.
Thus advertising and personal selling are alternative methods of performing the function of conveying information, but a particular blend of the two may be more effective than either of them alone. In many companies promotion decision require much of the marketing manager’s time.
Advertising is concerned with deciding how much advertising to use, what media to use (newspapers, radio, television, direct mail, billboard, car cards, point-of-purchase display, etc.,); the frequency with which the advertisements will appear (daily, weekly, monthly, etc.,); and the message to be employed (this involves the artwork and copy prepared for printed media and the commercials prepared for radio and television. Personal selling deals with the selection, supervision, and training of salesmen; the allocation of salesmen to territories; and the evaluation of salesmen.
“Promotion” is also often used in the trade literature in a restricts sense of special pricing arrangements to retailers and consumers.
The uncontrollable or environmental elements that the decision maker must adapt to, as shown in the outer hexagon of Figure 6, are not uncontrollable in an absolute sense. Instead they can best be viewed as controllable, but only at a cost.
(iii) Non marketing costs,
(iv) Structure of distribution,
(v) Public policy, and
(vi) Company organization.
What is Marketing Management – Orientation: Production, Product, Selling, Marketing and Societal Marketing Orientation
Marketing is all about interacting with markets, notwithstanding whether it is for profit or for non-profit. Firms such as Hindustan Unilever Limited (HUL) and Procter & Gamble (P&G) operate in consumer markets whereas Schneider Electric and Larsen & Toubro (L&T) are business to business marketers.
Humans have various ideas as to how life should be conducted. Some kind of philosophical core governs behaviours setting up moral and ethical boundaries. It is this philosophical idea that sets apart right from wrong and what is acceptable and what is not.
The absence of a strong philosophical core is likely to render a person inconsistent and confused. In a similar vein, organizations need philosophy to guide their thinking and behaviour. Organizations can be distinguished in terms of their corporate mindset or business orientation.
The orientation, in case of a person, influences his or her fundamental attitude, belief, feeling, and action with respect to a particular subject or issue, whereas an organization’s interaction with its market in terms of extended responses is influenced by its governing philosophy or orientation.
This implies that an organization can choose to conduct its business or marketing activity in different ways. Five different philosophies or concepts have been distinguished, namely production concept, product concept, selling concept, marketing concept, and societal marketing concept.
The ideas contained in these concepts give rise to different cultures in terms of how business is conducted with consumers. These concepts suggest that there are different ways to achieve organizational goals.
i. Production Orientation:
Production concept is probably the oldest business governing idea, which dates back to the period of short supply of goods. Earlier when demand exceeded supply, there was no incentive for the firms to factor in consumers into their operation. A business that is run on production oriented philosophy works with markets with the belief that product availability and affordability are key determinants of consumer buying.
This assumption creates strategic orientation that a firm should focus on while making the product available and affordable. The availability and affordability imperative brings two functions, namely distribution and production, at the centre of marketing strategy.
Accordingly, the first management task is to find an efficient distribution strategy that ensures product availability so that consumers can buy products with ease. Second, work on the production systems to bring down cost so that more consumers could buy them. The cost reduction creates affordability and thereby expands market.
The production concept was common to firms during the early period of industrialization when different products were born. Ford in its early times practised production concept where the company sought to bring down car prices so that it could attract a large number of customers.
Ford’s Model T was among the early cars that was manufactured on an assembly line, which reduced the car’s production cost by efficiencies in production processes. Production concept could still hold true in industries where consumer buying is predominantly done on the basis of price (they do not attach importance to non-price differentiation) and ease of buying.
Such a situation is often seen in commodity markets such as sand, cement, and iron ore. Mergers and acquisitions in the field of commodities such as cement, aluminium, and steel are guided by a motive to create large production systems that become instrumental in driving the cost of production down through economies of scale and experience curve effects.
ii. Product Orientation:
Businesses operate in a dynamic environment. Two of the important marketplace forces are consumers and competition. With the passage of time the consumer and competitive conditions evolved. As participating firms in a market went up so did the product availability.
The markets gradually shifted from excess demand to surplus supply. In this new evolved scenario, the old mantra of availability and affordability became ineffective. The ideas enshrined in production concept gradually got diffused across different firms rendering participating firms similar in their marketing approach.
This called for revisiting the business orientation and discovering something new which would allow firms to deal with the emerged scenario effectively. The key ideas of availability and affordability were found to be necessary but not sufficient to succeed. This led to a change in business orientation and product concept came into existence. The product concept shifted the focus to product quality, thus stating that ‘the consumer would favour products with the highest quality at a given price’.
The product concept is based on the belief that consumers are motivated to buy those products that offer most quality. This proposition changed the marketing focus to developing better products and improving them over time. Prima facie this concept makes good sense. People do look for better quality products and services.
This concept created a kind of product obsession wherein production managers sought to concentrate on quality improvement and built better product than ever before. However, soon this blind faith in the power of product quality exposed its fallacy. The belief that a better product is always bought by consumers actually turned out to be wrong.
Ralph Waldo Emerson wrote, ‘If a man can write a better book, preach a better sermon, or make a better mouse-trap than his neighbour, though he build his house in the woods, the world will make a beaten path to his door’.
This statement probably inspired the product concept, which lays absolute faith in the power of quality so much so that it blinds its followers to the reality. For many marketing companies product orientation turns out to be a trap. The advice given by Emerson that if you build a better mouse-trap the world would make a beaten path to your door wrongly shifts marketing focus from consumer to product.
What guarantees that a better mouse-trap will always get sold? Suppose somebody manages to invent an excellent quality mouse-trap, does it mean that people would flock at his door to take it? The answer is no, unless they face the menace of mice. People are not interested in products, rather they want a solution to their problems.
The better mouse-trap is a fallacy that may wrongly orient an organization into believing that people buy products when instead they buy solutions of their problems.
The product concept ignores the role of other marketing activities. People are unlikely to throng to buy a superior quality product automatically. The creation of superior quality product cannot be a ‘be all’ strategy. Even if a good quality product has been created for people to make a beaten path to firm’s door, many other enabling things will have to be done to make that happen.
First, people who could buy the product must be made aware and be informed about its superiority. Second, the product needs to be attractively designed, packaged, priced, and made available so that consumers can see, touch, and feel and become willing to buy it.
iii. Selling Orientation:
As time progressed several industries witnessed expansion of production capacity. This intensified competition and put pressure on firms to offer better quality products. It tilted the marketing situation in favour of the buyers. Reluctance was observed on the part of the buyer to respond promptly to marketed products and services.
The failure of earlier ideas in getting consumer response caused managers to rethink what they thought to be the key to doing business. This search led to the discovery of selling concept. The selling concept reposed faith in the power of persuasion. The followers of selling orientation have the belief that ‘it is a belief that consumers will not purchase or purchase enough of an organization’s product unless their interest is stimulated and they are persuaded to buy.’
The selling concept starts with an assumption that consumers are indifferent or reluctant to marketed products or services. This is especially true for things that are perceived to be inessential. Several products and services such as insurance and preventive health check-ups face consumer resistance because they are perceived to be unnecessary.
Two categories of products can be distinguished, namely bought products and sold products. Bought products are the ones consumers are self-motivated to buy for their perceived importance and interest (e.g., cosmetics and spectacles), whereas sold products are the ones consumers are unlikely to buy on their own.
It is for this indifference and reluctance that the sold products are pushed or offloaded on to buyers by putting in selling efforts. People rarely buy insurance and maintenance contract out of their self-motivation.
The sales orientation lays stress on overcoming consumer resistance through information, persuasion, and often hard selling. Selling is based on the premise that a consumer can be manipulated and cajoled into buying what is being sold. It reposes great faith in the power of salesmanship and advertising.
Consumers can be either psyched out or lured into giving a favourable response. It is not uncommon to come across aggressive pushy salesmen in trades such as car dealerships, insurance, credit cards, real estate, fund raisers, and grocery stores. The selling orientation exclusively focuses attention on ways to push the product across with little or no regard for consumer interest. A practitioner of selling is guided by his own self-interest rather than the interest of the buyer.
The selling concept can have disastrous consequences in the long term. A customer can be lured into buying by the power of persuasion or aggression only once but not repeatedly. The customers victimized by the power of seller aggression become dissatisfied and vent their anger by spreading negative word- of-mouth publicity.
The negative publicity influences future sales by turning potential customers into non-customers. This can erode future business opportunities. Selling approach can yield successful outcomes in situations when an organization enjoys unending supply of customers and it does not have to depend upon repeat sales.
This orientation is practised by sellers at the railway stations and places of tourist attraction. Their survival does not depend on repeat business from the same customer.
iv. Marketing Orientation:
Selling orientation is likely to be ineffective when an organization has to depend upon repeat business. The constraint of repeat business changes the marketing paradigm in favour of the customer. It becomes a legitimate concern of businesses to discover what actually is critical to get the customers to keep coming back.
The new reality of competitive intensification and market saturation led to the discovery of marketing concept in 1950s that placed the customer at the centre of the marketing universe. The earlier philosophies were centred on something that belonged inside the firm such as product, technology, production, or sales effort.
The marketing concept reversed the inside-out approach to outside-in approach, which implied that the business of an organization is not dictated by insiders or managers rather is dependent on outsiders or customers. The marketing concept believes that
‘It is fundamental for the organization to determine the needs and wants of target customers and develop and deliver satisfaction better than competitors.’
The marketing concept holds customer satisfaction as the key to achieving organizational goals. The dominant business logic according to marketing concept is that an organization depends upon customers for its survival. It is the customers who open up revenue streams.
Revenue is not found inside an organization rather it resides outside, in the customer’s pocket. Customer is the source of revenue. The only way to get customers to open their wallet is to offer those satisfying products and services. Therefore, customer satisfaction becomes the first precondition to do business in a competitive scenario. Customers do not patronize a dissatisfying organization if they have an option.
Let us consider how a customer chooses a product such as a toothpaste or a mobile phone. The choice is generally based on a subtle or elaborate calculation as to which out of the available brands offers the best satisfaction. Therefore, customer satisfaction is an essential starting point for doing business in the current business environment.
Marketing concept was initially met with a lot of resistance by managers because it sought to create a power shift from managers to customers. The earlier belief that decisions like what to produce, how to produce, how to sell, and where to distribute were the prerogative of people inside the organization and customer’s role was confined to ‘take it or leave it’.
In the absence of choice, customers were forced into compliance or subordination by organizations. Marketing concept makes customer supreme and seeks to achieve organizational goals through customer satisfaction. Profit goals will only be achieved if customers willingly accept product or services.
Getting the customer to do business with the firm is supreme and that is likely to happen only when managers give up their ego and work with subordinates as a team to target customers. Marketing ensures that all decisions are taken for customer satisfaction.
The essence of marketing concept is that the business of an organization is not what managers want it to be rather what customers want it to be. Customers are the ultimate arbiters who decide whether the decisions taken in an organization are correct or not. In marketing, a product or service represents condensation of all decisions taken by managers.
These are put to test at the point of purchase. For instance, in compact detergent market Surf competes with Ariel; these brands essentially represent the condensation of decisions made by their respective managers, which include decisions regarding colour, quality, packaging, price, brand name, form, communication and availability.
The correctness of these decisions is determined not by managers who take them rather customers. A positive customer response affirms that the managers’ decisions regarding that particular brand were right. A situation where the managers claim correctness of their decisions but the customer does not respond favourably is not possible. A decision is right only if it creates a satisfied customer.
Marketing concept introduced a paradigm shift that the whole business has to be seen from the point of its final result, that is, customer’s point of view. The marketing concept is put into practice by shifting the focus of value creation process to market or customers.
The processes are- (i) choice of the market (e.g., Apple operates in mobile handset market), (ii) selection of the target customer group (e.g., Apple does not cater to all customers in mobile handset market rather it targets the premium ones), (iii) determination of what customers in the target group need and want or what constitutes the concept of satisfaction (e.g., Apple understands what its target customers want in terms of usage ease, product touch and feel, instrument looks, and communication eco system), (iv) develop products or services in response to customer needs and wants (e.g., Apple devices like iPhone 6 is an outcome of product development in consonance with customer expectations), (v) plan how the product or service in question offers better satisfaction than competition (e.g., Apple devices score over its competitors in a number of customer significant ways such as aesthetics, appeal, and imagery).
Marketing concept offers a pragmatic solution as to how to survive in a competitive situation by putting customer at the centre of the business universe and singularly committing to create customer satisfaction the marketing concept can inadvertently jeopardize societal interest.
v. Societal Marketing Orientation:
The marketing concept adopts a narrow perspective of exchange as a transaction that happens between an organization and customer. It dictates that determining a customer’s needs and wants and delivering desired satisfactions is the key to achieve organization goals. There are two problems with this limited perspective.
The marketing concept legitimizes every product and services if it creates customer satisfaction. This means if a customer group demands hard drugs or firearms selling the same then becomes justified. Therefore, this logic ignores larger societal effects of such business.
From social perspective, drugs are undesirable because their use causes addiction with a host of personal and family ramifications. Marketing of firearms without adequate checks may promote crime and killings.
Some of the products that have attracted criticism for their undesirable social effects include fast food (e.g., hamburgers and fries) and high calories laden drinks for causing poor health; tobacco, alcohol drinks, and cigarette for causing addiction; plastic containers and bottles for causing environmental degradation; high pollution and gas guzzling SUVs for causing pollution; fur and rare animal skin as well as exotic meat for threatening animal welfare; mining for causing ecological disturbance; blood diamonds for human rights violation; gambling services for causing addiction and insolvency; and prostitution for causing exploitation.
Societal marketing originated after it was realized that what is good for an individual customer or a select group may not be good for society. This concept seeks to insert societal interest in the marketing concept so that customer satisfaction does not compromise societal well-being in the long run.
The societal marketing concept holds that the ‘key to achieving organization goals is in determining customer needs and wants and delivering satisfaction better than competitors in a manner that it preserves or enhances long term well-being of consumer and society’.
Marketing concept takes an individualistic perspective to business with a complete disregard for society. On the other hand, societal concept introduces the concept of what economists call ‘externality’. One of the categories of goods in economics is ‘demerit goods’. These goods refer to the goods whose consumption results in incurring of costs by those who actually do not consume them.
For instance, people who get addicted to drugs become a cost burden to either their family or the state. Smoking is a major cause of a variety of health problems, which requires expensive treatment. Societal marketing concept introduces an element of conscience into marketing and urges organizations to factor in the social effects of their actions.
What is Marketing Management – Issues: Size, Number of Buyers, Demographic Grouping and Geography
The best way to understand marketing is to visualize it as a practise that marketing firms undertake while working with markets. For instance, a company like Pepsi develops products, packages, distributes, and advertises them to satisfy consumers. These are all practices that fall within the ambit of marketing.
A market is a place or space that is made up of all present or potential buyers. A number of issues are connected to the concept of market such as size, consumer diversity and geographic spread, type of demand, volume and value.
The number of buyers in a market gives rise to its size, which can either be expressed in terms of volume (e.g., number of cars sold in India in a given year) or value (e.g., total car sales expressed in rupee terms). Markets differ in terms of their value and volume size. Commodities such as rice and wheat enjoy big size in terms of volume, whereas a product like gold does not have a big volume but has large value. These differences are caused by per unit value that a product commands.
2. Number of Buyers:
Size is also related to the number of buyers in a market. For instance, there are specialized products that appeal to a limited number of customers like shoes for astronauts or watches for deep divers. When a market consists of a small number of customers with highly specialized needs it is often labelled as niche market.
3. Demographic Grouping:
Consumers in a market can be divided into different groups based on their demographic aspects such as age, income, occupation, and gender. Presence of demographic groups in the market creates differences in demand that may render one product differently attractive to these groups. For instance, Fair and Handsome brand of fairness cream is targeted at the male segment of consumers.
Consumers can be geographically located at different places, which can create differences in their needs and wants. This can be discerned by studying the consumption basket of consumers situated at different locations. For instance, air conditioner and refrigerator sellers’ market their products in tropical locations with ‘tropicalized’ compressors that are equipped to work in hot weather.
Market is a complex concept, which makes working with the markets a challenging task. The process of satisfying consumer needs and wants cannot be haphazard and instinctual. The process of dealing with the markets must be properly managed or else both effectiveness and efficiency of the process will get compromised.
Accordingly, marketers properly analyse, plan, organize, implement, and control their marketing efforts. Marketers set targets in terms of sales or profits that eventually get converted into a number of exchanges with the customers. This requires a systematic analysis, planning, implementation, and control of marketing efforts or programmes.
Marketing is not an expense free activity. It requires resource spending on different activities and programs designed to achieve mutually satisfying exchanges between marketers and customers.
Accordingly, proper marketing requires the following activities:
Marketing begins with identification of the market in which a marketer wants to enter. It requires a detailed investigation and examination of various markets and selection of an attractive target. Some of the aspects include opportunity identification by evaluating market size, growth rate, competition, distribution channels, profit potential, and other trends. Market analysis is the first essential step in determining where the firm seeks to market its product or service.
Once the market has been selected, the marketer has to plan how it will satisfy customers in the selected market. This requires planning about different marketing tools and their combinations that shall be mixed to achieve desired results.
Some important questions that need to be addressed include what product to make, its quality level, price to be charged, promotion elements, and how it will be made available. Essentially, marketing planning is about determining strategy that requires detailing the steps that would be undertaken to achieve the set marketing goals.
Once planning is complete the marketer should move from drawing board to action. This requires organizing of marketing activities and their execution. For instance, a distribution plan execution of a company like Pepsi will include undertaking activities such as handling of cartons at factory, loading on trucks, transportation, and delivery at sale points.
Control is needed to ensure that actual execution is done as planned. Deviations are possible due to a variety of factors. Therefore, keeping a track of the progress of marketing activities is required for achieving the marketing goals. For instance, brands are advertised to create awareness, the effectiveness of which is assessed through control mechanism such as recall and recognition measures. The deviations are then identified and corrective action is undertaken.