Marketing in an organisation

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THE ROLE OF MARKETING IN AN ORGANISATION

The Definition of Marketing

Marketing touches all of us every day of our lives.  

We wake up in the morning and brush our teeth with Sensodyne toothpaste, shave with Gillette Sensor razor and use Dove shower gel.  

We put on a pair of Guess jeans and Nike running shoes whilst heading to the kitchen.  

We serve ourselves some Kellogg's Special K cereal and drink a cup of Nescafe coffee.  

We go to work, switch on the radio and most of the time we end up bombarded with ongoing commercials.

  • Marketing was defined by the American Association as:

    “the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisational objectives”

  • Philip Kotler defines Marketing as:

    “the analysis, planning, implementation and control of programmes designed to bring about desired exchanges with target audiences for the purpose of personal or mutual gain.  

    It relies heavily on the adaptation and co-ordination of product, price, place and promotion for achieving effective response”

There are many accepted definitions of marketing and in fact there is no one unified definition.

All the above definitions are correct but because of the difficulty of incorporating all the facets of marketing into a simple definition some additional key points are important to be added.

  • Marketing focuses on the needs and wants of the marketplace

  • Marketing is concerned with satisfying the needs and wants

  • Marketing involves analysis, planning and control

  • Marketing focuses on achieving customer satisfaction to achieve its business objectives, thus a marketing oriented firm is one that has changed the marketing philosophy into an overall business philosophy

Is Marketing all about selling?

  • NO – although we all tend to be bombarded with different commercials through different media channels, marketing is not only sales.  

    The latter is only the tip of the marketing iceberg.

A feature of marketing rather than sales:

It tends towards long term satisfaction of customer needs.

The Marketing Mix

The Marketing Mix also known as the 4 P's is comprised of:

  1. Product

  2. Price

  3. Place

  4. Promotion

Product

A product is anything that can be offered to a market for attention, for acquisition, use or consumption that might satisfy a want or a need.  

A product can be either a good or a service that is perceived together with its tangible and intangible attributes.

One might think the key product decision for a manufacturer of floor detergent is to focus on creating a formula that cleans more effectively. 

In actuality, while decisions related to the consumable parts of the product are extremely important, the TOTAL product consists of more than what is consumed. 

The total product offering and the decisions facing the marketer can be broken down into three key parts:

  • THE CORE PRODUCT - the overall benefit of buying the product

  • THE ACTUAL PRODUCT – the brand and quality you are purchasing

  • THE AUGMENTED PRODUCT - anything over and above the purchase such as delivery

The three levels of a product.

Price

In order to make a profit, a business should ensure that its products are priced above their total average cost. 

In the short-term, it may be acceptable to price below total cost if this price exceeds the marginal cost of production – so that the sale still produces a positive contribution to fixed costs.

If the business is a monopolist, then it can set any price. 

At the other extreme, if a firm operates under conditions of perfect competition, it has no choice and must accept the market price. 

The reality is usually somewhere in between. In such cases the chosen price needs to be very carefully considered relative to those of close competitors.

Consideration of customer expectations about price must be addressed. 

Ideally, a business should attempt to quantify its demand curve to estimate what volume of sales will be achieved at given prices.  

Sometimes a company is not free to price its product at any level it chooses.  

For example, there may be price controls that prohibit pricing a product too high.  

Pricing it too low may be considered predatory pricing or “dumping” in the case of international trade. 

Offering different price for different consumers may violate laws against price discrimination.  

Finally, collusion with competitors to fix prices at an agreed level is illegal in many countries.

The main key considerations when deciding the price of a product:

4 C's

COST – CUSTOMERS – COMPETITION - CORPORATE OBJECTIVES

Some pricing strategies would include:

  • Cost-plus pricing involves the determination of all fixed and variable costs associated with products or services. 

    After the total costs attributable to the product or service have been determined, managers add a desired profit % to each unit such as a 5 or 10 percent markup. 

    The goal of the cost-oriented approach is to cover all costs incurred in producing or delivering products or services and to achieve a targeted level of profit.

  • Going rate pricing is when a company sets its price of a product according to the price being charged by competitors offering similar products.  

    This is generally practised when there is a market leader and the other companies try and meet his prices.  

    This method can be rather dangerous for small companies who are trying to compete with bigger companies that enjoy benefits resulting from economies of scale.

  • The practice of ‘price skimming’ involves charging a relatively high price for a short time where a new, innovative, or much-improved product is launched onto a market.  

    The objective with skimming is to “skim” off customers who are willing to pay more to have the product sooner; prices are lowered later when demand from the “early adopters” falls.

  • Penetration pricing involves the setting of lower, rather than higher prices in order to achieve a large, if not dominant market share. 

    This strategy is most often used by businesses wishing to enter a new market or build on a relatively small market share.  

    This will only be possible where demand for the product is believed to be highly elastic, i.e. demand is price-sensitive and either new buyer will be attracted, or existing buyers will buy more of the product as a result of a low price.

  • Discrimination pricing takes place when a different price is charged either to different people or else during peak and off-peak.  

    For example, some public transport services entitle a pensioner to pay a different price than a person under 61 of age.  

    The dial-up internet charges are higher during peak hours.

Place

Place is also known as channel or distribution. It is the mechanism through which goods and/or services are moved from the manufacturer/service provider to the user or consumer.  

These are companies or persons that help in some way or other for goods and services to be distributed from manufacturers in order to reach consumers.

These intermediaries are generally referred to as:

  1. Agents

  2. Wholesalers

  3. Retailers

  4. Financial companies

  5. Transport companies

Intermediaries perform tasks such as:

  1. moving the goods efficiently

  2. breaking bulk

  3. consolidating goods (retail stores carry a wide assortment of goods from different manufacturers—e.g., supermarkets span from toilet paper to cat food)

  4. added services (e.g., demonstrations and repairs)

Promotion

  • Personal Selling is an oral presentation in a conversation with one or more prospective buyers for the purpose of making a sale.

  • Advertising is any paid form of non personal presentation and promotion of ideas, goods or services by an identified sponsor.

  • Sponsorship is where an organization pays to be associated with a particular event, cause or image. 

    Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organisation.

  • Direct marketing is any unsolicited (spontaneous) contact a business makes with existing or potential customers in order to generate sales or raise awareness.  

    Direct marketing allows a business to generate a specific response from targeted groups of customers.

  • Public Relations is the art and science of managing communication between an organisation and its key public constituents to build, manage and sustain its positive image.

The AIDA Model

AIDA is a communication model which can be used by firms to aid them in promoting their product or services. 

AIDA is an Acronym for:

  • Attention

  • Interest

  • Desire

  • Action

Beyond the 4P's other elements of the marketing mix have come to light through the work of Kotler amongst others.

These include:

  1. People

  2. Process

  3. Physical Evidence

People

An essential ingredient to any service provision is the use of appropriate staff and people. 

Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organisation wants to obtain a form of competitive advantage. 

Consumers make judgments and deliver perceptions of the service based on the employees they interact with. 

Staff should have the appropriate interpersonal skills, attitude and service knowledge to provide the service that consumers are paying for.

Process

Process refers to the system used to assist the organisation in delivering the service.

Physical Evidence

Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organisation. Physical evidence is an essential ingredient of the service mix. 

Consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service.

The relationship of the Marketing Plan to the Strategic Plan

The focus of a strategic plan is on the entire organisation.  It has to do with the vision of an organisation spelling out where the organisation would like to go in the future and how to get there.  

On the other hand, a marketing plan spells out the activities related to marketing (product, price, place and promotion) activities.  

It is only after formulating a very good strategic plan can a marketing plan be prepared.

The main 3 steps in a strategic plan are:

  1. Analysis

    Analysis implies the examination of the present situation.  

    This is generally conducted by a SWOT analysis (strengths, weaknesses, opportunities, threats).

  2. Choice

    At the time of performing analysis, long term goals are established.  

    It is then the time to choose the best methods or strategies to achieve the goals.  

    One has to decide where to compete and how to compete and if staying in the local market or expanding in the international markets.

  3. Implementation

    If a company manages to choose the right strategies, it would help in the execution or implementation of such strategies.  

    It is only at this stage that the long-term strategy can be translated into other plans such as:

marketing management
operations/production accounting/finance
computer information systems research and development
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