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SPOTLIGHT
By Dr. Upali Mahanama
With the impact of
technology it is imperative
that those engaged in
marketing products, develop
a closer awareness of the
challenges of globalisation.
In an article written by
former Vice President,
World Bank, Mohammed
Mushin, he states: “In a
remote village in India a
destitute widow had not
received her pension for
several months. She had
gone to a cyberkiosk and
paid Rs.5 to mail her
complaint to the
administration. The next day
a team of officials arrived in
the village. They discovered
that 47 others also shared
her plight.”
THE strength of communicating a message
fast and effectively based on the development
of information technology is exemplified by
this little story. In the context of globalisation,
this illustrates the power of e-marketing where
manufacturers from one part of the globe can
convey a message regarding their product or
service to a target customer in another part,
more effectively and speedily.
Globalisation and advancement of technology have made a strong impact on international businesses. Whilst the total marketing
function is the responsibility of marketing
managers, in today’s context even non- marketing managers holding key positions,
should have a basic appreciation of the principles of modern marketing.
The subject under discussion is topical and
consistent with the need to evolve and develop strategic marketing plans that are relevant in today’s highly competitive international business climate.
Scope of presentation
The scope of this presentation will be limited to:
• An overview of marketing
• The evolution and development of the
modern marketing concept
• Market forces and elements of marketing
mix
• The impact of e-marketing — the marketing strategy and plan.
Marketing — an overview
In the mid 1970’s, Texas Instruments developed a new digital watch based on its commitment to innovation of industrial products.
A quality watch was then sold around US$125.
As the watch was developed at a low operational cost, they decided to market it at US$
20. The company expected a big boom in sales.
They registered good sales for a couple of
years, after which the company started making losses. An analysis of the failure established, that the declining trend was based on a
marketing problem.
The company had not given due consideration to consumer preferences, in terms of the
characteristics of the watch, which had been
developed exclusively with the employment
of technical expertise.
Marketing disciplines should receive high
priority attention in launching products based
on consumer wants and needs. What is marketing? It is a complex management process
involving a number of interactive activities.
For non-marketing persons, only visible activities such as selling and advertising are regarded as marketing.
Marketing definitions:
Numerous definitions have been put forward by various authorities in the world. Let
us examine a few popular definitions
[a] The American Marketing
Association’s Definitions Committee [1960]:
“The performance of business activities that
direct the flow of goods from producer to consumer or user.”
[b] Philip Kotler: “The set of human activities directed at facilitating and consummating exchanges.” This is a broad definition
termed as “generic and not business specific.”
[c] William J. Stanton: “ A total system of
interacting business activities designed to
Plan, Price, Promote and Distribute want - satisfying Products and Services to present and
potential customers.” This definition certainly
projects marketing as a vibrant and dynamic
set of business activities.
[d] The Chartered Institute of Marketing
UK: “The management process responsible
for identifying, anticipating and satisfying
M A N A G E M E N T M O N T H LY
Power of e-marketing in
the context of globalisation
customer requirements profitably.”
[e] My Thought – Based on my own
knowledge and experience in the field of marketing spanning four decades, I wish to define
marketing as “The process by which services
or goods manufactured based on present or
potential customers’ current and future needs
and made available to them, at the Right Price,
at the Right Time, at the Right Place, in the
Right Quantities with the objective of getting
a reasonable return on capital employed.”
The very absence of a universally accepted
definition, should teach us an important lesson. As marketing is a pragmatic and vibrant
business philosophy, one does not have to
subscribe to a single definition. In view of the
complex nature of its activities, what is more
important is an understanding of the definitions and applying them to practical situations based on good judgment.
Evolution and development of the modern marketing concept
For understanding of the modern marketing concept, it is useful to take a peep into the
history of marketing which can be divided
into six stages:
Stage 1: The early stage
Even in the primitive stages of man, vital
basic needs had to be satisfied for his very
existence – needs such as:
• Food • Clothing • Shelter
Primitive man had to fend for himself to
satisfy his basic needs.
Stage 2: Specialisation and division of
labour
Centuries later, man began to live in small
groups and the process of specialisation and
division of labour developed progressively.
Based on various skills, man started to produce items in excess of his own requirements.
Consequently, the need to trade based on
mutual needs, arose.
Stage 3: The barter system
Due to specialisation and division of
labour, two important factors came into focus:
(a) As one produced more than his requirements, the excess had to be traded.
(b) As one produced only those items
based on his specialisation, he had to rely on
what others produced to satisfy his other
needs.
In this situation, inevitably a system of
exchange had to come into operation. Thus,
the barter system.
Stage 4: Money
The introduction of money paved the way
for overcoming certain shortcomings in the
barter system. Money performed the following functions:
• Created a medium for indirect exchange
of goods / services.
• Established a standard measurement of
value.
• Provided a medium for storage of value.
Stage 5: The industrial revolution
A great milestone in the history of marketing was marked by the industrial revolution between 1760 - 1850. Factories were established for mass production. Businesses
were mainly concerned with strengthening
manufacturing facilities and were 'production-oriented.' However, when supply exceeded demand, mass selling assumed greater
importance. To achieve this, more areas of
marketing activity began to develop.
Stage 6: Automation
Since World War II, the computer has
played a key role in the development of the
modern marketing concept, as it provided the
facility to analyse information accurately and
simplify operations.
In the early 1950s, with the advancement
of technology, automation developed to further strengthen the manufacturing effort.
Manufacturers could produce goods far in
excess of demand. In this situation, a more
organised effort in terms of selling, advertising and sales promotion had to be developed
and modern marketing as a professional discipline was thus "born" during this period.
The modern marketing concept
In earlier times, business organisations were
'production, technical or engineering - oriented.' With mass-production, an entirely new
business philosophy came into existence,
where all operations had to be based on a consumer-orientated approach. This represents the
modern concept of marketing where businessmen were compelled to be 'consumer – orientated' by paying greater emphasis to the needs,
desires and expectations of consumers as the
pivot of all operations.
The modern marketing concept interalia pays great emphasis to the following:
[a] The consumer is the most important
person in the business.
[b] All business operations should be consumer-orientated.
[c] Offering a specific consumer benefit
through the product.
It is common practice for non-marketing people to rush
into advertising if they experience a sales decline. This
can be suicidal, as the 'quickest way to kill a bad product is to advertise it.' One must clearly identify the reason for the sales drop and then employ the elements of
the marketing mix to arrest the sales decline
[d] The product should be 'good value for
money.'
[e] The manufacturer should get a reasonable return on investment.
Thus, the modern marketing concept
could be summarised as the business philosophy, which involves and justifies the existence of a business operation, by satisfying
consumer wants and needs and getting a fair
return on investment.
Market Forces: A marketing operation
has to contend with various forces which can
be divided into two specific areas:
• Internal forces • External forces
External forces are not controllable. Internal forces can be controlled by marketing
management.
[a] Internal Forces: A company engaged
in business has different departments to
handle different functions such as:
• Personnel • Accounts • Production •
Training • Marketing • Commercial.
For a successful marketing operation, the
marketing management has to effectively coordinate with all these departments within
the company.
[b] External Forces: These forces can be
divided into five main areas:
• Socio-Cultural Forces (Consumer
Bahaviour): These forces are based on
consumer behaviour such as likes, dislikes, habits, attitudes, prejudices and social trends.
• Economic Forces (Purchasing Power):
Consumer purchasing power is based on
the disposable income consumers have
after expenditure on basic needs, such as
food, clothing and shelter.
• Government (Political and Legal): marketing operations have to be conducted
in highly controlled or regulatory environments, based on the political ideologies of the party in power. These controls must be viewed as an integral part
of the business environment and marketing plans formulated accordingly.
• The Trade (Distribution Channels): Distribution is a key factor in marketing as
the product has to be made available to
the consumer’s choice of place. Companies are thus, dependent on trade channels.
• Competition (Other Players in the Market / Market Share): To achieve success
in competitive markets, the marketer has
to contend with competitor strategies and
develop his own aggressive marketing
plans.
Elements of the marketing mix:
An effective marketing operation is a combination of a number of inter-related areas of
activity and should be concerned with:
• Having a genuine desire to satisfy customer wants and needs.
• Offer a consistently high quality product which is good value for money.
• Having a thorough understanding of market forces and formulate aggressive marketing strategies.
• Setting realistic and achievable marketing objectives (quantified and time
framed).
The brand manager or the marketing manager should study all areas of activity on a
regular basis and employ the correct mix of
activities using his best judgment. These activities collectively constitute the marketing
mix and each activity is referred to as an element.
To facilitate comprehension and easy reference, the 12 activities which represent the
marketing mix are detailed below:
1. Marketing Research: A structured system of collecting information to assist
marketing management to solve problems and exploit opportunities.
2. Product: The development of a product
to satisfy consumer needs and modify,
improve or introduce new products based
on changing consumer needs / trends.
3. Branding: The discipline of giving a
product a specific name thereby creating a unique identity for the product to
facilitate brand loyalty, effective advertising, sales promotion etc.
4. Packaging: Developing an attractive and
user-friendly pack to preserve the product and facilitate easy handling by the
consumer, and using the pack as a promotional platform.
5. Pricing: The discipline of strategically
fixing an affordable price for the product based on market segmentation and
product positioning. It is a marketing
function as it is the marketing man who
knows the market situation and competitor activity.
6. Selling: Selling represents the exchange
of goods or services for money as opposed to the barter system which represented exchange of goods for goods.
7. Distribution: The use of trade channels
to ensure the ready availability of the
product at the consumer’s place of choice.
A trade channel is the path taken by the
product in moving from the manufacturer
to the consumer.
8. Advertising: The use of paid media of
mass communication to convey information or activities related to a product, to
the target consumer group, to create
awareness, educate, impel and compel
consumers to buy the product.
9. Sales Promotion: The activities, mainly
tactics and gimmicks designed to motivate and get maximum support from the
trade and the consumer to purchase your
product initially and then continuously,
or make increased purchases or to get new
users, etc.
10. Display: To arrange a point of sale creatively and attractively to catch the
consumer’s eye. A good display is regarded as a ‘permanent silent salesman.’
11. Merchandising: All activities and different methods employed by the seller
to promote the product at point of sale.
12. Servicing: Implementing systems and
procedures to offer continued assistance
to satisfy customer needs prior to making a purchase and after, on a continuous
basis.
It is common practice for non-marketing
people to rush into advertising if they experience a sales decline. This can be suicidal,
as the 'quickest way to kill a bad product is
to advertise it.' One must clearly identify the
reason for the sales drop and then employ
the elements of the marketing mix to arrest
the sales decline.
To be continued in next issue
Dr. Upali Mahanama DBA, FSBP,
MNZIM, is a founder member of SLIM and
a practising marketing consultant.