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Marketing Management
LESSON
3
CHANGING MARKETING PRACTICES
CONTENTS
3.0 Aims and Objectives
3.1 Introduction
3.2 Customer Concept
3.3 Societal Marketing Concept
3.4 Relationship Marketing
3.4.1 How the Business Environment is Changing?
3.4.2 Company Responses and Adjustment
3.5 E-business-setting up Websites
3.6 Let us Sum up
3.7 Lesson-end Activity
3.8 Keywords
3.9 Questions for Discussion
3.10 Suggested Readings
3.0 AIMS AND OBJECTIVES
In this lesson, we shall discuss about changing ‘Marketing Practices’. After studying
this lesson, you will be able to:
(i)
Understand customer concept and Societal Marketing concept.
(ii)
Define relationship marketing and E-business.
3.1 INTRODUCTION
Marketing starts with customers and ends with customers. Creation of superior customer
value and delivering high levels of customer’s satisfaction are at the heart of present day
marketing. It is a matter of common sense to appreciate the key marketing success
factors. Marketing concept proposes that an organisation should focus on customer needs
and wants, coordinate its efforts, and endeavour to accomplish organisational goals.
3.2 CUSTOMER CONCEPT
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Today many companies are moving beyond the marketing concept to the customer
concept. In the marketing concept companies worked at the level of the customer segment,
whereas in the customer concept the companies are shaping separate offers, services
and messages specifically targeted at individual customers within the segment. It is this
element of customization within the overall marketing strategy that has significantly
impacted the way companies react to consumer needs and wants.
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3.3 SOCIETAL MARKETING CONCEPT
Changing Marketing Practices
As the marketing concept was gaining wide acceptance in business organizations, it was
noticed that firms were ignoring their social responsibility while satisfying consumers
and achieving their organizational goals. Their activities are often in direct conflict with
society’s best interests. Thus, a firm may totally satisfy its customers, achieving handsome
profits but in the process of doing so, they might also be polluting the air and water in the
environment or damaging the cultural environment. As companies came to realize their
social responsibility, this factor became one of its primary objectives. It was seen that for
a company to prosper in the long-run, it needed to satisfy social needs as well as the
economic needs of customers. The marketing concept and a company’s social
responsibility is compatible if the management strives over the long-run to:
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Satisfy the wants of its product-buying customers, even if that introduced an element
of customisation.
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Meet the societal needs of others affected by the firm’s activities.
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Achieve the company’s performance objectives.
The societal marketing concept holds that organization’s task is to determine the needs,
wants and interests of target markets and to deliver the desired satisfaction more
effectively and efficiently than competitors in a way that preserves or enhances the
consumer’s and society’s well-being.
3.4 RELATIONSHIP MARKETING
Relationship marketing is based on building mutually satisfying long-term relations with
profitable customers rather than opting for short-term, ‘one-time profitable’ transactions.
In relationship marketing, the company creates a marketing network, which consists of
the company, and it’s supporting stakeholders, namely, customers, employees, suppliers,
distributors, retailers, ad agencies and others with whom the company has built a mutually
profitable business relationship.
3.4.1 How the Business Environment is Changing?
We are operating in a most dynamic business environment today, one that is changing
radically as a result of major radical societal forces, such as technological
advances, globalization and deregulation, which have created new behaviours and
challenges:
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Customers increasingly expect higher quality and service along with some
customisation. They are also showing greater awareness and price-sensitivity in
their search for value.
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Brand manufacturers are facing intense competition from domestic and
foreign brands and rising promotion costs coupled with shrinking profit
margins.
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Giant retailers are growing powerful and killing store-based retailers. They are
marketing an ‘experience’ rather than a product assortment.
3.4.2 Company Responses and Adjustment
Highly respected companies are adapting to the fresh challenges by:
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Reengineering the business process.
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Outsourcing from more competitive and cost effective sources.
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Marketing Management
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Attracting customers more effectively through e-commerce
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Benchmarking their activities, performances and cost structure.
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Building global network
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Becoming more market-driven
Marketers are also switching to new concepts such as:
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Customer relationship marketing
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Customer lifetime value
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Customer share
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Target marketing
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Integrated marketing communications
Check Your Progress
1.
How business environment is challenging today?
2.
Explain relationship marketing.
3.5 E-BUSINESS-SETTING UP WEBSITES
Websites have become much more creative than being simply online catalogues. Now
they promote products and try to create brand images, use sales promotions, and even
sell products and services.
The number of websites keeps on increasing everyday. What if a company creates a
website that nobody visits. It is like opening a show room that no prospective customer
comes to. Another situation can be, those who enter the showroom are not the target
customers. They are not the ones who would buy the available merchandise. The number
of websites is numerous and unless a company’s website is visited by the right customers,
it amounts to having wasted the money in creating the website. Search engines cannot
keep track of all the available websites.
Visits to websites are deliberate and initiated by the visitors who can be customers,
suppliers, or competitors, looking for particular products or information of their interest.
In case of mass media marketing communications, such as advertisements, there is no
passive exposure. What happens in case of traditional mass media marketing
communications such as TV, or radio commercials, or outdoor media, people get exposed
to them without really looking for such ads. In case of the Internet, the visitor initiative is
very important.
The Internet marketers have to make their websites attractive to the right target audience
so that, they are motivated to visit their specific websites. Developing and maintaining a
website requires considerable effort to attract visitors to the site and encourage them to
return again and again requires creativity, effective marketing and regularly updating the
site. Depending on the product category and the company’s marketing objectives for the
Internet, a website can be just a simple source of information about the company and its
products or a powerful tool to build brand image, a means to offer samples, or generating
sales leads.
In general, the communication objectives may relate to creating awareness, generating
customer interest, provide information, help in building a strong brand, a powerful image
or stimulate product trial by consumers.
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To accomplish their objectives, Internet marketers use many approaches, some of which
include:
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Banners: A banner ad is a boxed-in promotional message that often appears at
the top of the web page. If a visitor clicks on the banner ad, she/he is transported
to the advertiser’s home page. This is the most used form of Internet promotion.
Banners can be used to create brand recall or recognition. Other names given to
banners include side panels, skyscrapers, or verticals. Experienced web visitors
ignore banners and many experts believe that their usefulness is very limited and
their use seems to be declining.
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Sponsorships: This is another common advertising approach on websites. The
advertiser is given a permanent place on host’s website and pays a sponsorship fee
to the host. Some sites are targeted at specific segments, such as village is targeted
at women. This site has many sponsors who offer special deals and offer advice to
target visitors. The use of sponsorship sites is increasing and is more popular than
banners.
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Pop-Up and Pop-Under: When a visitor accesses a web page, sometimes a
window appears either in front or underneath the web page, the visitor is viewing.
Pop-ups become visible as sooner the web site is accessed and pop-under becomes
visible only when the visitor closes the browser. Pop-ups are usually larger than a
banner but smaller than full screen. Website visitors often get irritated with popups and consider them as intrusion.
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Portal Use: Some portals give a prominent place to a company’s offer for a fee.
When a visitor follows directed search, the marketer’s name appears prominently
at or near the top of the list. For example, when anyone uses Yahoo’s search
engine to locate a toy marketer, the name of K-B Toys is displayed prominently.
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E-mail: Companies send e-mails to Internet users to visit the company web site. It
can be effective only when the target customer is appropriate otherwise it becomes
“junk mail.”
Changing Marketing Practices
Apple Computer’s “Switch” Campaign
Apple developed ‘Switch’ campaign to attract Windows users to Mac computers. Apple has taken
the integration of web and TV to a new level. TBWA/Chiat/Day developed eight 30-second TV
spots. These spots feature regular people talking about their switch from Windows to Macintosh –
and of course, about how happy they are for having done so. The $75 million ad campaign has been
integrated with a new Apple site (apple.com/switch) by directing viewers to the site for more
information. Once at the site, consumers can actually view the TV commercials. The commercials
appear in the same quality as they would on TV, and they have become a hit – in one case, creating a
new crush named Ellen Feiss, whose homework was eaten by a PC.
( Source: Mylene Mangalindan, “Now TV Ads in Returns on Web Sites,” The Wall Street Journal,
February 11, 2002 ).
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Interstitials: These ads appear on the computer screen while a visitor is waiting
for a site’s contents to download. The opinion about the effectiveness of interstitials
is divided. Some believe they are irritating and a nuisance than a benefit, but some
others believe that the recall rate of interstitials is better than pop-ups.
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Push Technologies: Some companies provide screen savers to its website visitors,
that allow the firms to directly “hook” the visitor to their websites. This is an approach
to “push” a message to the consumers rather than wait for consumers to locate it.
These new technologies are known as push technologies or web-casting
technologies and open web pages or news updates and may also have video and
audio content.
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Sales Promotions: Many companies effectively use sales promotions such as
contests and sweepstakes to generate consumer interest. For example, Pepsi Co.
used a contest for its Mountain Dew named “Play Street Dash” (www.
pepsizone_yahoo.co.in).
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Marketing Management
Increasingly, more and more companies are using many of these promotional methods.
However, attracting consumers is only one objective. Internet visitors are believed to be
an impatient lot and holding them to the site is a challenge. Internet users in general, are
comparatively more educated and from middle and upper income bracket and a larger
percentage of young people using Internet live in urban areas. The use is gradually
spreading to smaller towns and even some rural areas in India have been provided
access. So far, the infrastructure facilities and costs of Internet are a major deterrent in
its faster spread. Many companies are gradually spreading their network of broadband
Internet services in different parts of our country and the future holds much promise.
Use of the Internet to promote products is new and evolving. The businesses still have
much to learn about how to attract visitors, keep them glued to the site for sufficient
time, and sell to them. With more research input and experience, companies will develop
more effective approaches about online marketing efforts.
Many companies initially thought, that web marketing could replace retail stores for
customers or sales people in case of business-to-business selling. Over the years,
experience has proved that it is very difficult to eliminate the services extended by
middlemen. The major areas of concern for online marketers include tackling the problems
associated with returned products, payment, and performance complaints. For example,
eBay simply brings the buyers and sellers together to facilitate transactions and if a
buyer was dissatisfied, the buyer has no place to go. These firms are making efforts to
avoid or solve such sticky problems.
Service back up is also a major problem for companies aspiring to move into Internet
marketing. Ann Grimes reports that quite a few successful Internet retailers combine
online access with physical store and consider it the best formula.
Security is also an issue. It seems that a very high percentage of people have never
made an online purchase. Many experts believe that security and privacy are major
issues and visitors fear that credit card numbers can be stolen because there have been
many publicised instances. There also have been serious incidents when hackers have
broken into marketers’ databases to steal account numbers. The Internet is something
impersonal unlike retail stores where consumers interact with store employees face-toface. This ‘impersonal’ characteristic makes consumers hesitant and less agreeable to
share personal or credit card information. So far, ensuring complete security and secrecy
on the Internet is very difficult for online marketers.
Check Your Progress
1.
What is the difference between pop up and pop under?
2.
How security is also an issue?
3.6 LET US SUM UP
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The societal marketing concept holds that organization’s task is to determine the needs,
wants and interests of target markets and to deliver the desired satisfaction more
effectively and efficiently than competitors in a way that preserves or enhances the
consumer’s and society’s well-being. Brand manufacturers are facing intense competition
from domestic and foreign brands and rising promotion costs coupled with shrinking
profit margins. A banner ad is a boxed-in promotional message that often appears at the
top of the web page. If a visitor clicks on the banner ad, she/he is transported to the
advertiser’s home page. This is the most used form of Internet promotion. Companies
send e-mails to Internet users to visit the company web site. It can be effective only
when the target customer is appropriate otherwise it becomes “junk mail.” Security is
also an issue. It seems that a very high percentage of people have never made an online
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purchase. Many experts believe that security and privacy are major issues and visitors
fear that credit card numbers can be stolen because there have been many publicised
instances.
Changing Marketing Practices
3.7 LESSON-END ACTIVITY
Study a consumer durable marketing company. Discuss its important practices that your
think appear to keep in view the long-term welfare of the society.
3.8 KEYWORDS
Customer Concept
Societal Marketing Concept
Relationship Marketing
E-mail
Sponsorships
Interstitials
Sales Promotion
3.9 QUESTIONS FOR DISCUSSION
1.
“Many companies are moving beyond the marketing concept to the customer
concept”. Justify.
2.
Discuss societal marketing concept in detail.
3.
How the business environment is changing in modern era?
4.
What are the concepts to which marketers are switching?
5.
What are the different approaches used by internet marketers?
3.10 SUGGESTED READINGS
Rajan Saxena, Marketing Management, Tata McGraw Hill, 2002.
Ramasamy & Namakumari, Marketing Management, Macmilan India, 2002.
S. Jayachandran, Marketing Management, TMH, 2003.
Ramphal and Gupta, Case and Simulations in Marketing, Galgotia, Delhi.
SHH Kazmi, Marketing Management, Excel Books, New Delhi.
Saroj Dutta, Marketing Sense, Excel Books, New Delhi.
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