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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.