1. Defining contemporary marketing.
2. Exploring marketing management, particularly from a European perspective – locally, nationally and internationally.
3. Designing marketing strategies and plans.
4. Understanding the challenges of digital technology management in marketing.
Why marketing is important?
The value of marketing
• Marketing managers are challenged to deliver value and profits in the face of an unforgiving economic environment, unprecedented changes in business, growing globalization, climate change concerns and continuing digital technology advancement. Finance, operations, accounting, and other business functions are all dependent on sufficient demand for products and services from customers who are prepared to pay for them so that companies can make a profit. Thus, financial success often depends on marketing ability.
• Marketing skill can be used to market ten main types of entities:
• Marketing’s value also extends to society as a whole. It has helped introduce new or enhanced products and services that ease or enrich people’s lives. Successful marketing builds demand for products and services, which in turn creates jobs. By contributing to the bottom line, successful marketing also allows firms to engage in socially responsible activities more fully.
The scope of marketing
• Marketing is about identifying and meeting human and social needs at a profit. One of the shortest definitions of marketing is that it is the process of ‘meeting customer needs profitably’.
• A formal definition is that marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. The marketing concept focuses on a total company effort to provide exchange and value for customers, clients partners and society. Coping with these exchange processes calls for a considerable amount of work and skill. Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties. Thus, we see marketing management as the managerial responsibility that aligns the total company effort towards choosing and satisfying target market(s) by getting, keeping and growing customers through creating, delivering and communicating superior customer value at a profit to the organization.
• Marketing is an often-misunderstood term, seen more as ‘the art of selling products or advertising, and many people are surprised when the full extent of marketing beyond selling, and advertising is articulated. The reality is that selling, and advertising are only the tip of the marketing iceberg
Marketing’s role in creating demand
• Marketers must be skilled at stimulating and managing demand. Demand is the willingness and ability of buyers to purchase different quantities of a product or service, at different prices, during a specific time period. Both willingness and ability must be present; if either is missing, there is no demand. Great marketing is when you see an unfulfilled need and launch an appropriate offering, and the offering matches this need and there is demand and ultimately profitable sales of your offering.
• Marketing managers seek to influence the level, timing and composition of demand to meet the organization’s objectives. Marketers must identify the underlying cause(s) of the demand state and then determine a plan of action to shift the demand to a more desirable state. Demand is linked to needs and wants. Needs are basic human requirements such as air, food, water, clothing and shelter. Humans also have strong needs for recreation, education and entertainment. These needs become wants when directed to specific objects that might satisfy the need. Wants are shaped by our society. Demands are wants for specific products or services backed by an ability to pay. Companies must measure not only how many people want their offering but also how many are willing and able to pay for it. These distinctions shed light on the frequent criticism that ‘marketers create needs’ or ‘marketers get people to buy things they don’t want’. Marketers do not create needs: needs pre-exist marketers. Marketers, along with other societal factors, influence wants.
• Some customers have needs of which they are not fully conscious or that they cannot articulate. The marketer must probe further. We can distinguish five types of needs:
• Stated needs (the customer wants an inexpensive car).
• Real needs (the customer wants a car whose operating cost, not initial price, is low).
• Unstated needs (the customer expects good service from the dealer).
• Delight needs (the customer would like an onboard GPS navigation system).
• Secret needs (the customer wants friends to see them as a savvy consumer).
• Responding only to the stated need may short-change the customer. Companies need to be innovative and creative and be ahead of consumer needs and wants.
• In this text we focus on three transformative forces: technology, globalization and social responsibility.
Technology – The heartbeat of modern marketing is technology focused on data activation, personalization, building a digital culture and having an integrated simplified technology operating model. Web, mobile and social are core technologies that are now dominant within society. Beyond the rapid rise of the internet, smartphones and social media is an ever-increasing range of innovative technologies that could be impactful for marketing. They include the Internet of Things (IoT), augmented and virtual reality, robotics, wearable technologies, data analytics, machine learning, artificial intelligence and more. The pace of change and the scale of technological growth is staggering.
Globalization – The continuing integration of world trade and the world’s major economies, coupled with technological advances in transportation and communications, has made it easier for companies to market and easier for consumers to buy products and services from all over the world. We can have kiwis from New Zealand and oranges from South Africa, with worldwide access to money and phone calls. Politically and economically, global business operates with poverty amidst plenty, on-going economic and political crises, conflicts, and social unrest around the world, and particularly in the Middle East, and unprecedented stock growth and decline. Globalization has also made countries increasingly multicultural. Businesses in the twenty-first century have multiple product and service lines and operate in multiple geographies with millions and even billions of customers, sometimes with revenues the size of small economies.
Take Unilever, the Anglo–Dutch company: in any given day, 2.5 billion people use its products. The average market capitalization of the top 100 global companies is a staggering €117 billion. Interestingly, only 22 of the top 100 global companies are European, and from just nine countries. Many companies are now using Marketing Glocal – operating both globally and locally by managing customers locally within their area, nationally within their borders and also globally on the world stage.
Social responsibility – Companies have a corporate social responsibility (CSR) to understand how their actions impact on the planet and the sustainability of human life. Capitalism and other economic systems can cause major social issues such as wealth concentrations, poverty, pollution, water shortages, climate change and wars. These issues require attention and discussion. Because marketing’s effects extend to society as a whole, marketers must consider the ethical, environmental, legal and social context of their activities. The marketing task is thus to determine the needs, wants and interests of target markets and satisfy them more effectively and efficiently than competitors while preserving or enhancing consumers’ and society’s long-term well-being As consumers grow more socially conscious, some companies incorporate social responsibility as a way to differentiate themselves from competitors, build consumer preference and achieve notable sales and profit gains.
Failures of CSR, such as the horse meat scare, oil spills and VWs emission scandal, all raise concerns about whether companies pay lip service or really engage with this.
What new capabilities these forces have given consumers and companies
New consumer capabilities – Across the World, a generation of digital natives exists, who grew up with technology and are the first generation for which the internet, mobile technology and social media are not something they have had to adapt to. They have no memory of (or nostalgia for) pre-internet history; they take the internet for granted, accept and expect to have Snapchat, WhatsApp, email, Wikipedia, search engines, Skype and social media such as Facebook and YouTube as normal. This is the most connected generation ever, having more mobile phones than people. Expanded mobility, communication, information and technology enable customers to make better choices and share their preferences and opinions with others around the world. At the same time, consumer engagement is a huge challenge.
This is a complex phenomenon, and understanding the underlying dynamics that facilitate its development, particularly in the virtual environment, is important due to its ability to influence value creation for customers and organizations, and because it introduces ongoing and multifaceted challenges to marketers.
• Consumers use the internet as a powerful information, interaction and purchasing aid.
• Consumers embrace mobile.
• Consumers tap into social media.
• Consumers reject marketing practices they find inappropriate.
New company capabilities – At the same time, technology, globalization and social responsibility have generated a new set of capabilities to help companies cope with and respond to the consumer challenges.
• Companies can use the internet as a powerful information and sales channel with increased personalization and customization.
• Companies use data analytics for richer insights about markets, customers, prospects and competitors.
• Companies embrace mobile and location-dependent information.
• Companies are moving towards increased automation, robotics and the Internet of Things (IoT)
• Production, selling, marketing and holistic marketing philosophies
• The production philosophy is one of the oldest concepts in business. It holds that consumers prefer products that are widely available and inexpensive. Managers of production-orientated at businesses concentrate on achieving high production efficiency, low costs and mass distribution. This orientation has made sense in developing countries such as China, where the largest PC manufacturer, Legend (principal owner of Lenovo Group), and domestic appliances giant Haier have taken advantage of the country’s huge and inexpensive labor pool to dominate the market. Marketers also use the production concept when they want to expand the market. The product philosophy proposes that consumers favor products offering the most quality, performance or innovative features, and companies with this focus overemphasis the development of the product or service, always searching for improvements. However, managers are sometimes caught in a love affair with their products or services. They might commit the ‘better mouse trap’ fallacy, believing a better product will by itself lead people to beat a path to their door. As many start-ups have learned the hard way, a new or improved product or service will not necessarily be successful unless it’s priced, distributed, advertised and sold properly and critically, actually aligns with customer needs.
• The selling philosophy holds that consumers and businesses, if left alone, won’t buy enough of the organization’s offerings. It is practiced most aggressively with unsought offerings – an offering buyer don’t normally think of buying, such as insurance and cemetery plots – and when firms with overcapacity aim to sell what they make, rather than make what the market wants. Marketing based on hard selling is risky. It assumes customers coaxed into buying an offering or service will not complain online or offline but might even buy it again.
• The marketing philosophy emerged in the mid-1950s as a customer-centered, sense-and-respond philosophy – a total company effort to achieve customer satisfaction at a profit. Dell, for example, doesn’t manufacture a PC or laptop for its target market but rather, it provides product platforms on which each person customizes the features he or she desires in the machine. The marketing philosophy holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering and communicating superior customer value to your target markets, and that everyone in the organization has the customer as the focus of their operations and plans.
• The contrast between the selling and marketing philosophies:
1. Selling focuses on the needs of the seller; marketing on the needs of the buyer.
2. Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it.
• The holistic marketing philosophy Without question, the trends and forces that have defined the new marketing realities in the first years of the 21st century are leading firms to embrace a new set of beliefs and practices, but there are still challenges of orientation and perception to the reality of a customer focus.
• Two different focuses
1. Marketing Customer focus
a. Finance is aware that each decision can ultimately affect the customer and profitability is aligned with the customers’ needs and the marketing plan.
b. Production is focused on producing the agreed product or service in a timely manner aligned to the stated goals of marketing.
c. Sales are customer focused and only promise what they can deliver, looking to the lifetime value of the customer rather than the short-term objective. Sales is seen as working with the customer.
2. Marketing Non-Customer focus.
a. Finance is inward focused on keeping costs low, regardless of the effect on marketing plans and the customer.
b. Production has a speed and cost focus, which cuts corners and compromises on quality – not concerned if the offering does not fulfil needs.
c. Sales are always thinking of making the sales and their sales target, and their own daily or weekly figures. Even if the customer does not need the product/service they will pressurize them in order to make the sale.
• Relationship marketing – A key goal of marketing is to develop deep, enduring relationships with people and organizations that directly or indirectly affect the success of the firm’s marketing activities. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business.
• Integrated marketing is critical, as a marketer must devise marketing activities and programs to create, communicate and deliver value for consumers such that ‘the whole is greater than the sum of its parts’. Two key themes are that
1. many different marketing activities can create, communicate and deliver value and
2. marketers must design and implement any one marketing activity with all other activities in mind
• Internal marketing is a core aspect of holistic marketing that focuses internally on company employees. Internal marketing is inward-facing marketing and is the plan for how marketing will ensure that all staff are aware of and aligned to the vision and marketing plan of the company. Internal marketing supports and motivates staff to want to serve customers and to manage their roles in a consumer-focused way.
• Performance marketing requires understanding of the critical metrics, both financial and non financial, that are measures of the marketing activities and programs, and is often referred to as marketing metrics. Top marketers must go beyond sales revenue to examine the marketing scorecard or dashboard metrics and interpret what is happening to market share, customer-loss rate, churn rates, social media and web analytics, customer satisfaction and other measures aligned with managerial insights. They must also consider the legal, ethical, social and environmental effects of marketing activities and programmes
Overview of marketing management
• Case study of marketing management – We can identify a specific set of tasks that make up successful marketing management and marketing leadership. We’ll use the following case study to illustrate these tasks in the context of the plan of the text.
• Understanding marketing management
• Developing marketing strategies and plans
• Managing digital technology in marketing
• Capturing marketing insights
• Connecting with customers: segmentation, targeting and positioning
• Building strong brands
• Creating value – shaping the market offerings
• Communicating value
• Delivering value
• Implementing marketing responsibly for long-term success