IMPORTANCE OF MARKETING DEATIL NOTES
It would be difficult to imagine a would without marketing. But it may be equally difficult to appreciate the importance effective marketing play in most aspects of our lives. We take for granted the media that are largely supported by advertising, the vast assortment of goods distributed through stores chose to out homes, and the ease with which we can make purchases.
The foundation of marketing is exchange, in which one party provides to another party something of value in return for something else of val~e. In a broad sense, marketing consists of all activities designed to generate or facilitate an exchange intended to satisfy human needs ..
Business firms and nonprofit organizations engage in marketing. Products marketed include goods as well as services, ideas, people, and places. Marketing ac¬tivities are targeted at markets consisting of product purchasers and also individuals and groups that influ¬ence the success of an organization.
In a business context, marketing is a total system of business activities Jesigned to plan, price, promote, and distribute want-satisfying products to target mar¬kets in order to achieve organizational objectives.
Marketing's evolution in the United States has gone through three stages : It began with a product orienta¬tion, passed through the sales orientation, and is now in a market orientation, In this third. stage a company's efforts are focused on identifying and satisfying cus¬tomers' needs.
Some successful organizations remqin at the first or second stage, not progressing to the market-orienta¬tion stage, because they have monopoly power or be¬cause their products are in such great demand. Other firms have difficulty accepting a market-driven approach to business or have problems implementing a market orientation.
A business philosophy called the marketing concept was developed to aid companies with supply capabili¬ties that exceed consumer demands. According to the
marketing concept, a firm is best able to achieve its performance objectives by adopting a customer orien¬tation, coordinating all of its marketing activities, and fulfilling the organization's goals. Examples of imple¬mentation of the marketing concept include relationship building , mass customization, heightened sensitivity to quality, value creation, utilizing performance metrics, and the socictal marketing concept. Ethics, the stan¬dards of behavior accepted by society, are important concerns of market oriented organizations.
Marketing management involves segmenting markets, selecting target markets, and est;iblishing a position in the minds of buyers. The primary' focus of marketing is the marketing mix-the combination of a product, price promotion, and distribution process to meet the needs of a targeted segment of a market.
Marketing is practiced today in all modern nations, regardless of their political philosophy. As international competition has heated up, the attention paid to mar¬keting has increased. In the US between one fourth and one-third of the civilian work force is involved with mar¬keting, and about one half of consumer spending cov¬ers the cost of marketing. This investment is justified by the form, information, place, time, and possession utilities it creates.
Depending on circumstances, marketing can be vital to an organization's success. In recent years numer¬ous service firms and non-profit organizations have found marketing to be necessary and worth while. Mar¬keting also is useful to individuals. Students particu¬larly find marketing helpful in the search for career op¬portunities.
Countries encourage international trade for economic, social, and political reasons. In particular, it provides access to goods that otherwise would be unavailable and, because of comparative advantage, it maximizes a country's economic potential. Firms engage in inter¬national marketing because of demand abroad, the satu¬ration of domestic markets, and to serve the interna¬tional needs of their domestic customers. Many com¬panies in the U.S. and abroad derive a substantial share of their total sales and profits from their foreign marketing operations.
Although international trade can contribute to the growth of a nation's economy, a country must be con¬cerned about the relationship between exports and im¬ports. For the. U.S., trade surpluses are needed to off¬set deficits in other balance-of-payment categories. In recent years, the U.S. balance of trade has been ad¬versely affected by consumers' preferences for imported products, entry barriers, and other policies of foreign governments, as well as the growing technological and marketing capabllitie.s of other countries.
In terms of organizational structure, the .simplest way to operate in a foreign marketing is to export. This canbe done directly to consumers via the Internet or through middlemen specializing in foreign .trade.
Another method is to export through company sales branches located in foreign countries. More involved approaches include contracting, engaging in a joint ven¬ture, or forming a wholly owned subsidiary. The most fully developed organizational structure for international marketing is the multinational corporation.
The macroenvironment faced by an international mar¬ket in various countries will determine whether a global, regional, or local strategy is appropriate. Differences in the social and cultural environment are reflected in family values, customs, education, and language. Critical eco¬nomic conditions include the infrastructure in a market and a country's stage of economic development. Politi¬cal and legal forces unique to international marketing are trade barriers and international trade agreements. Organizations such as the World Trade Organization (WTO) ad well as trade agreements and economic alli¬ances in Europe (EU), North America (NAFTA), South America (MERCOSUR), Asia (ASEAN) and elsewhere in the world have implications for marketing in both member and nonmember nations.
To develop an international marketing program, a basic issue is how global or standardized the marketing can be. This is made difficult by the fact that market data may be less plentiful in many parts of the world, and conducting marketing research can be very diffi¬cult. In some cases each of the marketing mix elements requires modification or adaptation.
Oftentimes operating in a foreign market entails ac¬commodating unique conditions. Chief among these are dumping, foreign exchange, countertrade, price differ¬entials, gray markets, cartels, and bribery.
The dynamic nature of the consumer market is re¬flected in its geographic distribution and its demographic characteristic. The U.S. population is shifting toward the West and the South. Further, the mix of people in rural communities is changing as the out-migration of young people continues but an in-migration of older Americans increases.
Demographics are the vital statistics that describe a population. They ar.e useful to marketers because they are related to behavior and they are relatively easy tog ather. Demographics frequently used to describe consumers are age, gender, family life cycle, income ethnicity and other characteristics such as education, occupation, religion, and nationality.
The buying behavior of ultimate consumers is de¬scribed as a five stage buying decision process, influ¬enced by information, social and grup forces, psycho¬logical forces, and situational factors.
The stages in the buying-decision process are need recognition, identification of alternatives, decisions, and postpurchase behavior. Buying decisions are either high or low involvement. High involvement decisions con¬sist of all five stages. Low involvement decisions in¬clude fewer stages. Low-involvement situations occur when the consumer views the decision as relatively mi¬nor, there is brand and store loyalty, or in impulse buy¬ing.
Information fuels the buying decision process. With¬out it, there would be no decisions. There are two cat¬egories of information sources : commercial and so¬cial. Commercial sources include advertising, personal selling, selling by phone, and personal involvement with a product. Word of mouth, observation and experience with a product owned by someone else are social sources.
Social and group forces are composed of culture, sub¬culture, social class, reference groups, family and households, Culture has the broadest and most general influence on buying behavior, whereas other household occupants have the most specific and immediate im¬pact on an individual . Social and group forces have a direct impact on individual purchase decisions as well as a person's psychological makeup.
Psychological forces that impact buying decisions are motivation, perception, learning, personality, and atti¬tudes. All behavior is motivated by some aroused need. Perception is the way we interpret the world around us and is subject to three types of selectivity: attention, distortion, and retention.
Learning is a change in behavior as a result of expe¬rience. Stimulus-response learning involves drives, cues, responses and reiflforcement. Continued pOsi¬tive reinforcement leads to habitual buying and brand loyalty.
Personality is the sum of an individual's traits that influence behavioral responses. The Freudian Psycho¬analytic theory of personality has caused marketers to realize that the true motives for behavior are often hid¬den. The self-concept is related to personality. Because purchasing and consumption are very expressive ac¬tions, they allow us to communicate to the world our actual and ideal self~concepts.
Attitudes are learned predispositions to respond to an object or class of objects in a consistent fashion. Besides being learned, all attitudes are directed toward an object, have direction and intensity, and tend to be stable and generalizable. Strongly held attitudes are dif¬ficult to change.
Situational influences deal with when, where, how and why consumers buy, and the consumer's personal con¬dition at the time of purchase. Situational influences are often so powerful that they can override all the other forces in the buying decision process.
The business market consists of organisations that buy goods and services to produce other goods and
services, to resell to other blJsiness users or consum¬ers, or to conduct the organisation's operations. It is an extremely large and complex market spanning a wide variety of business users that buy a broad array of busi¬ness goods and services. Besides manufacturing, the business market includes agriculture, reseller, govern¬ment, services, nonprofit, and international components.
Business market demand generally is derived, inelas¬tic, and widely fluctuating. Business buyers usually are well informed about what they are buying. Business market demand is analyzed by evaluating the number and kinds of business users and their buying power.
Business buying, or purchasing, has taken on greater strategic importance. Organisations are buying more and making less, under intense time and quality pressures, and developing long-term partenering relationships with suppliers.
The buying-decision process in business market6 may involve a.s many as five stages: need recognition, iden¬tification'..of alternatives, evaluation of alternatives, pur¬chase decision, and postpurchase behavior. The ac¬tual number of stages'in a given purchase decision de¬pends on a number of factors including buying motives, the type of decision, the buying center, the buyer-seller relationship, and business buying patterns.
Business buying motives are focussed on achieving a firm's objectives, but the business buyer's self-inter¬est must also be considered. The types of business buying situations are new-task buy, straight rebuy, or modified rebuy.
The concept of a buying center reflects the multiple buying influences in business purchasing decisions. In a typical buying center are people playing the roles of users, influencers, deciders, gatekeepers, and buyers.
Developing a buyer-seller relationship stems from rec¬ognizing the importance of the customer's supply chain and the benefits of d,eveloping loyalty.' Relationships require commitment and are built on trust and sharing of information.
Buying practices of business users often are quite different from buying practices in the consumer mar¬ket. In the business market, direct purchases (that is, without middlemen) are more common, purchases are made less frequently, and orders are larger. The nego¬tiation period usually is longer, and reciprocity arrange¬ments sometimes exist. The demand for service is greater, and the dependability of supply is more critical. Finally; leasing (rather than product ownership) is quite common in business marketing.
Electronic commerce is having a major impact on business transactions involving standardised products. Even though it will not replace the need for personalised relationships in many situations, the Internet will affect nearly every aspect of business marketing.
A market consists of pt30ple or organizations with wants, money to spend, and the' willingness to spend it. However, within most markets the buyers' needs are not identical. Therefore, a single marketing program for an entire market is unlikely to be successful. A sound marketing program starts with identifying the differences that exist within a market, a process called market seg¬mentation, deciding which segments will be pursued as target markets, and selecting a competitive position that will be conveyed to customers through the marketing mix.
Most marketers adopt some form of market segmen¬tation as a compromise between the extremes of a strat¬egy that treats that market as an aggregate, undifferen¬tiated whole, and a strategy that views each customer as a different market. Market segmentation enables a company to make efficient use of its marketing re¬sourcEl's. Also, it allows a small company to compete effectively by concentrating on one or two segments. The apparent drawback of market segmentation is that in will result in higher production and marketing costs than a one-product, mass-market, strategy. However, if the market is cmrectly segmented, a better fit with cus¬tomers' needs will actually result in grater efficiency. For segmentation to be effective: (1) the bases for seg¬mentation must be measurable with obtainable data, (2) the segments identified must be accessible through existing marketing institutions, and (3) the segments must be large enough to be potentially profitable.
At the broadest level, most markets may be divided into two segments: ultimate consumers and business users. The four major bases used for further segment¬ing the consumer market are geographic, demographic, psychographic, and behavioral. The business market may be segmented on the basis of customer location, customer type, and transaction conditions. Normally, in either the consumer or business market, a seller will use a combination two or more segmentation bases.
The three alternative strategies for selecting a target market are market aggregation and single-segment and multiple-segment strategies. Market-aggregation strat¬egy involves using one marketing mix to reach a mass, undifferentiated market. With a single-segmen( strat¬egy, a company still uses only one marketing mix, but it is. directed at only one segment of the total market. A multiple-segment strategy entails selecting two or more segments and developing a separate marketing mix to reach each segment. The guidelines for selecting seg¬ments to target are compatibility with the firm's goals, fit with the firm's res.ources, profit potential, and the strength of the ,competition.
When targets have been selected, the organisation must decide how to position the• offering. Position is the way a brand or organisation is viewed relative to the competition by current and prospective customers. A
positioning effort should convey the benefits most de¬sired by the target market. The three steps in position¬ing are (1) selecting the positioning concept, (2) design¬ing the feature to convey the position, and (3) coordi¬nating the marketing mix to consistently communicate the desired position ..
Forecasting is essential in evaluating possible target segments. It involves estimating the demar.d of a mar¬ket. Management usually estimates the total sales that could be expected under ideal conditions for all firms comprising the industry-market potential- and for its particular product-Sales potential. The final step in es¬timating demand is a sales forecast, indicating prob¬able sales for the company's brand and of a particular product in a future time period and with a specified mar¬keting program. The forecast normally covers one year.
