1. The Concept and Process of Marketing
Marketing is described as a combination of behavioural and management sciences, which are augmented by instinct, imagination, inspiration and innovation. It needs a systematic approach to develop new products. It needs capabilities to identify new channels. Marketing provides an individual the ability to convert thoughts into actions.
1.1. Elements of the Marketing Process
The goal of having a marketing process is to increase company’s top line. Marketers formulate marketing strategies based on insights gathered through marketing research. Marketing research enables marketers to make decisions on the following aspects:
Markets that should be targeted
Offerings that should be focussed upon
The type of association that should be developed with customers
Industry experts have different opinions about elements of the marketing process. Key elements of the marketing process are illustrated in figure 1 below.
Figure 1: Elements of the marketing process
Needs and Wants: Needs are the basic human requirements. They are required for a human to survive. For example, we need food, shelter, clothing, etc. to survive. Needs cannot be created by any marketer. On the contrary, wants are something that are not essential for humans to survive. It is something which consumers wishes for to satisfy a particular need. For example, food is a need but the desire to have burger is a want. The want for a burger depends on various factors. Wants of an individual are also influenced by the society he lives in.
Products: ‘Product’ is the core of marketing mix. It is essential to have a clear understanding of the product and its functions, to formulate its placement, promotion and pricing strategy. Packaging, warranty and after sales support also play an important role in the marketing of product. Packaging of a product has a qualitative value linked to it and hence it is a very important criteria for the product marketing.
Value and Satisfaction: In the current environment, getting customers and retaining them is very challenging because of the cut-throat competition in market. Customers choose a brand that provides maximum value in terms of customer perception. Customers assess the product on the basis of benefits it delivers and cost paid in comparison to the other goods available in the market. Customer satisfaction is defined as product’s ability to meet customers’ needs and expectations effectively, and deliver value. All top companies lay strong focus on the satisfaction of their customers and that is why they are successful.
Exchange Utility and Transaction: Want, need and value of a product do not ensure successful marketing. Both buyer and seller should have something that the other person desires. The goal of a marketing transaction is to get a product that is more desirable than the one that was used earlier.
Markets: “A market comprises customers with common needs and wants, and capable to perform an exchange to satisfy their needs and wants”.
It is essential to have a free flow of products or services from seller to buyer, for a market to run successfully and efficiently. There should be an effective communication between all parties involved in the transaction. The seller should give all important information to the buyer.
1.2. Benefits and Costs of Marketing Orientation
‘Marketing Orientation’ is defined in multiple ways by many industry experts. The two definitions that are most apt are given below:
Market orientation has three key components ? customer focus, competitor focus and inter-departmental coordination. It is also linked to the long-term strategy and profitability of the company.
Marketing orientation is also defined as gathering marketing intelligence at the organisational level. The intelligence is collected on current and future needs of customers. It also involves sharing of customer insight across various departments and the firm’s ability to respond to the gathered intelligence.
Market orientation has the following advantages:
Sales: Market orientation has a connection with sales growth. Firms that are more market oriented have higher sales growth.
Market share: Market orientation is linked to market share. Companies that are market orientated have higher market share than the non-market oriented companies.
New Products: Market orientation also has a connection with product success. Market oriented companies experience higher success rate for their newly launched products.
There have been many discussions related to the success and failure of marketing companies. It is often believed that the cost of a market oriented company is high as compared to a non-market oriented company. This is true but benefits achieved from being marketing oriented are much more than the cost incurred by such companies.
The costs involved in market orientation are as follows:
Market research: It can be conducted either through an in-house well-qualified research team or through research agencies and consultancies. It involves huge amount of money.
Strategy: Formulation of the segmentation, targeting and positioning strategy involves cost.
Customised product: Cost is also incurred in developing a customised product as per the customer requirement. A standardised product is always cheaper than a customised product. This is true for all industries.
Promotional activities: Undertaking promotional activities (such as advertisements on radio, television and magazine, and sales promotion) involve huge amount of money.
Distribution network: Developing an efficient and effective distribution network also involves cost.
Researchers have assessed market oriented companies on the basis of various parameters such as return on equity, profitability and market share. The findings reveal that such companies are more successful and enjoy higher growth. Such companies are also highly organised and plan more proactively. They work in collaboration with various departments (e.g. finance, sales and product development).
On the other hand, companies that are not market oriented, have lower operating expenses. They are cautious of their expenses and hence profits of such companies are higher as compared to companies that focus on marketing.