|
 |
 |
|
|
 |
Student Publications
Author: Richard Adams
Title:
Marketing Operations
Area:
Country :
Profile:
Program:
Available for Download:
Yes
Sharing knowledge is a vital component in
the growth and advancement of our society
in a sustainable and responsible way. Through
Open Access, AIU and other leading institutions
through out the world are tearing down the
barriers to access and use research literature.
Our
organization is interested in the dissemination
of advances in scientific research fundamental
to the proper operation of a modern society,
in terms of community awareness, empowerment,
health and wellness, sustainable development,
economic advancement, and optimal functioning
of health, education and other vital services.
AIU’s mission
and vision is consistent with
the vision expressed in the Budapest Open
Access Initiative and Berlin Declaration
on Open Access to Knowledge in the Sciences
and Humanities. Do you have something you
would like to share, or just a question
or comment? We would be happy to hear from
you, please use the Request Info link below.
For more information on the AIU's Open Access
Initiative, click
here.
|
|
| |
|
|
| |
Introduction
A market-focused, or customer-focused, organization first determines
what its potential
customers desire, and then builds the product or service. Marketing
theory and practice is
justified in the belief that customers use a product/service because
they have a need, or
because a product/service provides a perceived benefit.
Two major factors of marketing are the recruitment of new customers
(acquisition) and
the retention and expansion of relationships with existing customers
(base management).
Once a marketer has converted the prospective buyer, base management
marketing takes
over. The process for base management shifts the marketer to
building a relationship,
nurturing the links, enhancing the benefits that sold the buyer in
the first place, and
improving the product/service continuously to protect the business
from competitive
encroachments.
Marketing methods are informed by many of the social sciences,
particularly psychology,
sociology, and economics. Anthropology is also a small, but growing,
influence. Market
research underpins these activities. Through advertising, it is also
related to many of the
creative arts.
For a marketing plan to be successful, the mix of the four "Ps" must
reflect the wants and
desires of the consumers in the target market. Trying to convince a
market segment to
buy something they don't want is extremely expensive and seldom
successful. Marketers
depend on marketing research, both formal and informal, to determine
what consumers
want and what they are willing to pay for it. Marketers hope that
this process will give
2
them a sustainable competitive advantage.
Marketing management is the practical
application of this process. The offer is also an important addition
to the 4P's theory.
Within most organizations, the activities encompassed by the
marketing function are led
by a Vice President or Director of Marketing. A growing number of
organizations,
especially large US companies, have a Chief Marketing Officer
position, reporting to the
Chief Executive Officer.
The American Marketing Association (AMA) states, "Marketing is the
process of
planning and executing the conception, pricing, promotion, and
distribution of ideas,
goods, and services to create exchanges that satisfy individual and
organizational
objectives".
Two Levels of Marketing
Strategic Marketing attempts to determine how an organization
competes against its
competitors in a market place. In particular, it aims at generating
a competitive advantage
relative to its competitors.
Operational Marketing executes marketing functions to attract and
keep customers and to
maximize the value derived for them, as well as to satisfy the
customer with prompt
services and meeting the customer expectations. Operational
Marketing includes the
determination of the marketing mix.
Four Ps
Main article: marketing mix
3
In popular usage, "marketing" is the promotion
of products, especially advertising and
branding. However, in professional usage the term has a wider
meaning which recognizes
that marketing is customer centered. Products are often developed to
meet the desires of
groups of customers or even, in some cases, for specific customers.
E. Jerome McCarthy
divided marketing into four general sets of activities. His typology
has become so
universally recognized that his four activity sets, the Four Ps,
have passed into the
language.
The four Ps are:
Product: The product aspects of marketing deal with the
specifications of the actual
goods or services, and how it relates to the end-user's needs and
wants. The scope of a
product generally includes supporting elements such as warranties,
guarantees, and
support.
Pricing: This refers to the process of setting a price for a
product, including discounts.
The price need not be monetary - it can simply be what is exchanged
for the product or
services, e.g. time, energy, psychology or attention.
Promotion: This includes advertising, sales promotion, publicity,
and personal selling,
and refers to the various methods of promoting the product, brand,
or company.
Placement or distribution refers to how the product gets to the
customer; for example,
point of sale placement or retailing. This fourth P has also
sometimes been called Place,
referring to the channel by which a product or services is sold
(e.g. online vs. retail),
which geographic region or industry, to which segment (young adults,
families, business
people), etc.
4
These four elements are often referred to as the
marketing mix. A marketer can use these
variables to craft a marketing plan. The four Ps model is most
useful when marketing low
value consumer products. Industrial products, services, high value
consumer products
require adjustments to this model. Services marketing must account
for the unique nature
of services. Industrial or B2B marketing must account for the long
term contractual
agreements that are typical in
supply chain transactions. Relationship marketing attempts
to do this by looking at marketing from a long term relationship
perspective rather than
individual transactions.
As a counter to this, Morgan, in Riding the Waves of Change
(Jossey-Bass, 1988), adds
"Perhaps the most significant criticism of the 4 Ps approach, which
you should be aware
of, is that it unconsciously emphasizes the inside�out view (looking
from the company
outwards), whereas the essence of marketing should be the outside�in
approach". Even
so, having made this important caveat, the 4 Ps offer a memorable
and quite workable
guide to the major categories of marketing activity, as well as a
framework within which
these can be used.
Seven Ps
As well as the standard four Ps (Product, Pricing, Promotion and
Place), services
marketing calls upon an extra three, totaling seven and known
together as the extended
marketing mix. These are:
People: Any person coming into contact with customers can have an
impact on overall
satisfaction. Whether as part of a supporting service to a product
or involved in a total
service, people are particularly important because, in the
customer's eyes, they are
5
generally inseparable from the total service. As
a result of this, they must be
appropriately trained, well motivated and the right type of person.
Fellow customers are
also sometimes referred to under 'people', as they too can affect
the customer's service
experience, (e.g., at a sporting event).
Process: This is the process(es) involved in providing a service and
the behaviour of
people, which can be crucial to customer satisfaction.
Physical evidence: Unlike a product, a service cannot be experienced
before it is
delivered, which makes it intangible. This, therefore, means that
potential
customers could perceive greater risk when deciding whether to use a
service. To
reduce the feeling of risk, thus improving the chance for success,
it is often vital
to offer potential customers the chance to see what a service would
be like. This is
done by providing physical evidence, such as case studies,
testimonials or
demonstrations.
Web 2.0 and Marketing New 4Ps
The orginal 4Ps concept idea was developed to help marketers to
manage the four most
important aspect of marketing. With the Internet and the Web. 2.0,
marketers need to
adapt a new perspective on these elements that is encompassing and
strategic, not narrow
and tactical. Author and consultant Idris Mootee came up with the
concept of "New 4Ps"
model in 2001 in his book High Intensity Marketing (SA Press 2001)
to supplement the
traditional marketing 4Ps. They are Personalization, Participation,
Peer-to-Peer and
Predictive Modeling. Today,these are the directions that cutting
edge marketing is
advancing.
6
The first "P" is the simple idea of
"Personalization" which now takes on a whole new
meaning. The author refers to customization of products and services
through the use of
the Internet.
The second "P" is the concept of "Participation", it is to allow
customer to participate
in what the brand should stand for; what should be the product
directions and even which
ads to run. This concept is laying the foundation for disruptive
change that we have yet to
see the full impact with the degree of democratization brought about
by this idea. By
enabling each of us to create and publish our own stories, the power
of deciding what we
read; listen and watch has spread from a handful of media companies
to anyone with a
camera, a connection and a computer.
The third "P" is "Peer-to-Peer" which refers to customer networks
and communities
where advocacy happens. The historical problem with marketing is
that it is
"interruptive" in nature, trying to impose their brand on the
customer. This is most
apparent in TV ad, which pushes out its own idea of what brand is
without engaging the
customers. These "passive customer base" will ultimately be replaced
by the "active
customer communities". Brand engagement happens within those
conversations.
The last "P" is "Predictive Modeling" which refers to neural
networks algorithms that
are being successfully applied in marketing problems (both a
regression as well as a
classification problem).
Beyond the 4 Ps
Resources, Relationships, Offerings and Business Models
7
Marketing in the past focused mainly on basic
concepts like the 4 Ps, and primarily on
the psychological and sociological aspects of marketing. Competitive
advantage was
created by directly appealing to the needs, wants and behaviors of
customers, better than
the competition. Successful marketing was based on who could create
the better brand or
the lowest price or the most hype. Marketing in the future will be
based on a more
strategic approach to competitive marketing success. Marketers will
consciously build
and allocate resources, relationships, offerings and business models
that other companies
find hard to match. This does not mean the four P approach is dead,
simply that it has
been expanded upon.
Resources
Companies with a greater number of resources than their competitors
will have an easier
time competing in the marketplace. Resources include: financial
(cash and cash reserves),
physical (plant and equipment), human (knowledge and skill), legal
(trademarks and
patents), organizational (structure, competencies, policies), and
informational (knowledge
of consumers and competitors). Small companies usually have a harder
time competing
with larger corporations because of their disadvantage in resource
allocation.
Relationships
Success in business, as in life, is based on the relationships you
have with people.
Marketers must aggressively build relationships with consumers,
customers, distributors,
partners and even competitors if they want to have success in
today's competitive
marketplace. There are four type of relationships (1)win-win
(2)win-lose (3)lose-lose
(4)lose-win.(customer-vendor)
8
Business Models
The concept of product vs. product in competitive marketing is
dying. It's slowly
becoming business model vs. business model. Business model
innovation can make the
competition's product superiority irrelevant. Business model
innovation allows a
marketer to change the game instead of competing on a level playing
field.
Customer focus
Many companies today have a customer focus (or customer
orientation). This implies that
the company focuses its activities and products on consumer demands.
Generally there
are three ways of doing this: the customer-driven approach, the
sense of identifying
market changes and the product innovation approach.
In the consumer-driven approach, consumer wants are the drivers of
all strategic
marketing decisions. No strategy is pursued until it passes the test
of consumer research.
Every aspect of a market offering, including the nature of the
product itself, is driven by
the needs of potential consumers. The starting point is always the
consumer. The
rationale for this approach is that there is no point spending R&D
funds developing
products that people will not buy. History attests to many products
that were commercial
failures in spite of being technological breakthroughs.
SIVA
A formal approach to this customer-focused marketing is known as
SIVA (Solution,
Information, Value, Access). This system is basically the four Ps
renamed and reworded
9
to provide a customer focus.
The SIVA Model provides a demand/customer centric version
alternative to the well-
known 4Ps supply side model (product, price, place, promotion) of
marketing
management.
Product -> Solution Promotion -> Information Price -> Value
Place ->Access
The four elements of the SIVA model are:
- Solution: How appropriate is the solution to the customers
problem/need
- Information: Does the customer know about the solution, and if so
how, who from, do
they know enough to let them make a buying decision
- Value: Does the customer know the value of the transaction, what
it will cost, what are
the benefits, what might they have to sacrifice, what will be their
reward?
- Access: Where can the customer find the solution. How
easily/locally/remotely can they
buy it and take delivery.
This model was proposed by Chekitan Dev and Don Schultz in the
Marketing
Management Journal of the American Marketing Association, and
presented by them in
Market Leader - the journal of the Marketing Society in the UK.
The model focuses heavily on the customer and how they view the
transaction.
10
Product focus
In a product innovation approach, the company pursues product
innovation, then tries to
develop a market for the product. Product innovation drives the
process and marketing
research is conducted primarily to ensure that a profitable market
segment(s) exists for
the innovation. The rationale is that customers may not know what
options will be
available to them in the future so we should not expect them to tell
us what they will buy
in the future. However, marketers can aggressively over-pursue
product innovation and
try to overcapitalize on a niche. When pursuing a product innovation
approach, marketers
must ensure that they have a varied and multi-tiered approach to
product innovation. It is
claimed that if Thomas Edison depended on marketing research he
would have produced
larger candles rather than inventing light bulbs. Many firms, such
as research and
development focused companies, successfully focus on product
innovation. Many purists
doubt whether this is really a form of marketing orientation at all,
because of the ex post
status of consumer research. Some even question whether it is
marketing.
References
"The Concept of the Marketing Mix" from the Journal of Advertising
Research, June
1964 pp 2-7
"Passionate & Profitable: Why Customer Strategies Fail and 10 Steps
to Do Them
Right!", Lior Arussy, John Wiley & Sons, 2005
"Marketing Management: Strategies and Programs", Guiltinan et al,
McGraw Hill/Irwin,
1996
11
"In the Mix: A Customer-Focused Approach Can
Bring the Current Marketing Mix into
the 21st Century". Chekitan S. Dev and Don E. Schultz, Marketing
Management v.14 n.1
January/February 2005
"Swarming the shelves: How shops can exploit people's herd mentality
to increase
sales?", The Economist,
2006-11-11,
p. 90.
Marketing Nutrition: Soy, Functional Foods, Biotechnology, and
Obesity (2005), Brian
Wansink, Champaign, IL: University of Illinois Press
"The Customer Driven Company: Moving From Talk to Action" R.C.
Whiteley, Pfeiffer
& Company, 2000
Brown, Stephen (1993), ,,Postmodern Marketing?", European Journal of
Marketing Vol.
27 No. 4, pp. 19-34
Brown, Stephen (1998), ,,Post-Modern Marketing 2 � Telling Tales",
Thomson Business
Press.
12
|
|
 |
dd |
 |
|
|
|
|
|
|
|
|
|
|
