Marketing Concepts
Marketing strategies are very crucial for any business. It is a prime concern for any business to want to expand its business in this very competitive market. For any business to succeed, the management needs to have a martial plan on how to get the organizations products to a large percentage of consumers. A number of strategies have to be adopted and tried from time to time to discover the best approach possible. It is advisable to appreciate that Marketing is the process through which firms communicate the value of their products or services to their customers (Edward, 1992). A marketing concept is a management philosophy through to which the goals of a firm can be best achieved through identifying and satisfying of the stated and unstated needs and wants customers. There are five important concepts through which organizations can choose to run their business that is the product concept, the production concept, marketing concept, the selling concept, and the holistic marketing concept. All these concepts are important for an organization’s success in its marketing activities. An organization can undertake more than one concept when undertaking its marketing activities.
In this paper, my focus shall be on three main concepts. These are the product concept, the production concept and finally the marketing concept. First, I shall start with the product concept. A product is anything that can be offered to the market for attention, acquisition, use, or consumption. Firms that use this philosophy are majorly concerned with the quality of their own products and services. These firms therefore assume that for as long as their products are of high standards, people would buy and consume those product and services. The concept articulates that consumers will always prefer those products that are of enhanced value, performance and characteristics contrary to normal products. this concept to hold then product differentiation must be employed.
Differentiation involves changing the product features so that it is perceived as unique in the eyes of the customer in terms of quality, technical superiority, customer support services and the appeal of more value for the money. The concept is applicable in some market position like for instance, electronics and mobile handsets where customers are more willing to buy electronic devices and mobile handsets that are of high quality as opposed to those that of low quality. It is through the use of the product concept that companies receive feedback from consumers concerning the possibility of implementing and furthering the proposed concept. This concept calls on marketers to understand the dynamics of the product, in order to show off the best qualities of the product or services. For the marketer to understand the product dynamics then he or she must be able to understand an important model namely the product life cycle.
Narver & Stanley (1990) explian that product life cycle refers to the stages through, which a product passes that are from its introduction to the marketing, growth, maturity to its decline or reduction in demand in the market. Not all products reach this final stage as some continue to grow while others rise and fall. The introduction stage is made up of low growth of sales as the users may not be aware of its true potential.It is at this stage that branding of products and superiority intensity is well known. Intellectual property protection, including patents, copyrights and trademarks are obtained (Narver & Stanley, 1990). Marketers should, therefore, supply extra information to the users regarding the product’s use and its quality. Growth is characterized by innovations of in the market and profits begin to flow. At this point, the business seeks to establish preference of its brand and increase market share therefore, product worth is sustained and extra characteristics and other extra services may be included.
Marketers can create an image in the product class in the presence of its competitors. At the maturity stage, the product has already been accepted and new firms start experiment by innovating new models of the product leading poor sales to differentiate the product from that of Product features like usage, packaging, quantity and quality may be enhanced in order to distinguish the commodity from the rest of the products, already on the market. The decline stage involves the product dying off due to decrease in sales as competition is stiff thus hard for a company to maintain its sells. The product may be maintained, possibly by rejuvenating it through addition of enhanced characters and braking into new markets.
Treacy & Wiersema (1993) established that most companies are employing this concept for the one reason that is it distinguishes their products from others and gives them an image in the eyes of the consumers. Two corporations that are quiet outstanding in the use of the product concept are Google and Apple companies have strived hard on their products and. Both corporations are always seeking to leverage on the advantages of products differentiation. They offer their consumers products that are extremely enriched with enhanced features and highly innovative. An example is the Google drive that lets you store, sync, and access your files anywhere on the web, on your hard drive or on your mobile device. Within the automotive industries, hybrid cars are starting to become more common with vehicles such as the Toyota Prius becoming abundant on the roads. With this being said, car manufacturers are all pushing towards having at least one hybrid car available. This trend has now reached Ferrari who recently revealed their Ferrari 599 hybrid also referred to as HY-KERS at the Geneva Motor Show. They released this car at the motor show strictly as a concept vehicle however, just as with all product concepts, it is serving as an image of what is possibly to come in the future. In actuality, they are currently trying to take this concept into production and have it available within the next five years (Treacy & Wiersema, 1993).
The second philosophy is the production concept. The concept came into existence during the time of the industrial revolution and lasted until early 1920’s. It primarily proposes that customers will choose those products and services that are widely available and are of low cost therefore firms are mainly concerned with producing as many units as possible. Firm must have a mass production facility to enable efficient production with low price that leads to cost efficiency and make the product available to the customers through mass distribution. Mass distribution is where one strategy is used for all customers that is undifferentiated marketing i.e. ignores the aspect of customization (Treacy & Wiersema, 1993).
Maximum production enables the firms to maximize profitability, as they are able to exploit economies of scale. In production-orientated firms, the needs of customers are secondary compared with the need to increase output. Such an approach is probably most effective when a business operates in very high growth markets or where the potential for economies of scale is significant. It is natural that the companies cannot deliver quality products and suffer from problems arising out of impersonal behavior with the customers. It was practiced by earlier industrials; it soon became a standardized practice.
One of the best examples of the production concept is Henry Ford’s Model T, which illustrates how the concept enabled the business to be more effective those times. Henry Ford is the father of the production line. By developing an efficient assembly line, Ford was able to bring the cost of the Model T down from around $800 to just under $300, putting affordable transportation into the hands of average consumers in the United States. The biggest secret to Ford’s assembly line was that he built one car, which was the Model T. There were very few variations on the basic structure and functionality of this automobile. One of the best-known slogans of the time, which Ford himself coined implied that every consumer had a right to access any type of the product he/ she desires. Clearly, this phenomenon embodied the fundamental business philosophy the production concept, which was practiced by Ford at the time.
Though this concept was majorly practiced in the earlier industries, there are still firms today that employ it and it has yielded success. Some American companies had adopted price-cut policy in the beginning of 19th century. Some Japanese companies had adopted this concept in the 1960s and 70s in international markets. Many companies have been conducting their activities with production concept even today. Examples include; Mittelplate Company that deals with crude oil production. This has been the fundamental concept in this company and it has seen the company to greater heights. Another example is Rajiv Plastic Industries (RPI), which is one of Asia’s leading manufacturer and exporter of color & Additive Masterbatch & Polymer Compound manufacturers. It applies this concept in the production of the plastics needed by its customers and this has enabled it to expand greatly (Parasuraman, Zeithaml & Berry, 1988).
This concept is more suitable when companies want to expand but it is faced with many challenges, as it does not factor in for fluctuations in consumer needs and wants. For example, in Ford’s case consumers’ needs with regards to cars to began to change and thus consumers wants were not limited to basic transportation at an affordable price. The car became a major status symbol as it filled ego and social-communications needs for consumers, which made consumers to demand for more body styles, different colors, different features, and a variety of new services. Ford did not anticipate and never really acknowledged this change in demand but General Motors did and as a result, General Motors' sales by the end of the 1920’s dramatically outstripped Ford's sales. This, therefore, means that any company that forgets to track these changing wants and needs, and yet continues to practice the production concept will end up facing the consequences.
The third philosophy is the marketing concept. This concept evolved due to changing needs and wants of customers and thus making them to be selective in their purchases as they only bought those products that satisfied their needs. The concept center on client requirements before building the commodity aligns all functions of the company to focus on those needs and realizes profit by successfully satisfying the customer needs identified over the long-term. General Electric Company was among the first companies to employ this concept where John McKitterick, then Chief Executive Officer at GE, initiated this philosophy whereby the company’s business was now to fill the identified needs of its customers rather than trying to bend the will of the customer to fit the needs of the company. It rests on four pillars that include target market, customer needs, integrated marketing and profitability (Treacy & Wiersema, 1993). The concept therefore begins with the customer after which, programs aimed at customer satisfaction are put in place hence it focuses on marketing research in order to give meaning to market segments, market size, and their needs and thereafter the marketing team will decide on which marketing strategy and strictures of the marketing mix to adopt. Marketing strategy refers to the process through which an organization concentrates its scarce resources on the greatest opportunities to increase sales and achieve competitive advantage for example through creating awareness of products that will satisfy consumers’ needs.
Marketing mix is crucial when determining a product or brands offering. It includes price, place, product and promotion. Firms should produce the right product, sale it at the right price, in the right place and using the most suitable promotion. For the marketing concept to succeed then aspects, such as, market segmentation and niche marketing must be put in place. Niche marketing is where an organization undertakes to serve a small a number of customers of the total potential customers whom it clearly understands its needs and wants. Market segmentation refers to the putting of prospective buyers into groups or segments that have common needs and will respond similarly to a marketing action. Bases of market segmentation include customer needs, geographic like region of the country, demographic like age and sex, psychographic like social class and finally behavioral like product usage and brand loyalty, these groupings enable an organization to understand customer needs and thus tailor products to those needs so that it achieves customer satisfaction hence improving its competitiveness and profitability.
A case study based on market segmentation on a Bank’s Transaction Account Holders is illustrated below. This case study is from an articleOne Method, Four Examples (Maynard Robison).TheBackground is of a regional bank that provided a rich-featured deposit invention that had fascinated and appealed to most s of its customers. The above case study is an example of how organizations can acquire information with regards to their customer characteristics include, market research that will enable the organization to understand the needs of its market. This understanding will help in grouping of customers as well as designing products that are able to meet their needs hence leading to customer satisfaction.
Most customers with the account were using only a limited number of its features, and maintaining all of the features for all the customers was very costly. Hence, the client wanted to tailor a number of accounts to specific customer segments, to be able to match products to the customer needs and tastes, to ensure optimum usage of the product features and to cement customer loyalty. This market segmentation analysis did not include a survey; instead, it relied wholly on customer account data that was provided by the bank. Practically any segmentation of the account holders for purposes of marketing to rely on customer account data thus including a survey or other outside data in the segmentation analysis itself would not have been vital. Segments were identified through the SOM method that was used to analyze the records of all 50,000 holders of the account.
The segmentation analysis yielded three segments that is the "Committed," 47% of the account holders, had the highest balances, and were most likely to use multiple services, and in almost all cases had checking accounts in addition to the deposit product. The "Active," 36% of the account holders, engaged in the most frequent transactions, they maintained low balances, and were least likely to use multiple services. The "Parkers" (17%) had high CD balances, nearly universal incidence of CD accounts, and limited number of transactions. The marketing outcomes were that once the segments were identified, a temporary telephone survey to explore the financial needs and attitudes of each segment was carried out. The three account versions were then created each with its own features and marketing plan that reflected the marketplace needs and priorities of the customers (Parasuraman, Zeithaml & Berry, 1988).
Firms have employed this philosophy in the past and they have been very successful. An example is McCormick industries. Its founder, Cyrus McCormick, introduced the first mechanical wheat reaper into his country just prior to the Civil War. His reaper is considered one of the most outstanding inventions of the Nineteenth Century, and is credited with contributing to the North winning the Civil War. McCormick believed in the marketing concept, although he did not refer to it as such. McCormick knew that successful commercialization of the reaper involved more than just making a good product. He clearly knew that the entire marketing plan needed to display the worth of his harvester and translate it into reality. He went ahead and demonstrated its possibility by providing sales demonstrations to trounce original sales resistance. He adopted installment payment programs, after sale product services, homogeneous parts, off-season repairs, and full product warranties. Actually, McCormick discovered the first ever commodity recalls. Furthermore, considered as one of the first people to use full-color commercials and employ an all-inclusive set of promotional materials to promote his sales. This enabled him to achieve high sales (Edward, 1992).
Today most companies have adopted this concept because they have realized that the customer is the king. Firms are conducting consumer research day in day out to familiarize with consumer needs after which they tailor their products to meet these needs and wants. This in essence has proved to be an advantage for most companies because they are able to compete effectively in the market as they have the right products. Examples of firms using this concept today include Wal-Mart which has a motto of satisfaction guaranteed. This means that irrespective of an employee’s position in Wal-Mart, such as, whether he or she is a manager or a cashier, the client must always get the first attention. Another example is Rajiv Plastic Industries (RPI), which is one of Asia’s leading manufacturer and exporter of color & Additive Masterbatch & Polymer Compound manufacturers. It applies this concept in the production of the plastics needed by its customers and this has enabled it to expand greatly.
Marketing has experienced some trends due to changes in the environment among them green marketing which refers to marketing of products that environmentally friendly. It includes activities such as changes in the production process, modification of the products, changes in packaging among others. E marketing has also gained fame and it involves carrying out marketing activities via the internet. This has enabled organizations to reach out to many customers thus increasing their sales (Edward, 1992).
To sum up marketing is a core activity in an organization and for any organization to succeed then it must be able to embrace it effectively. This is because it is a means of communication from the organization to its potential customers and for it to attract the customers then it should engage in activities that are appealing to them. The organization should bear in mind that customers are the reason for its survival; therefore, all its activities should be geared towards satisfying them.
The first priority is for organizations to review their marketing strategies with the aim of arriving at the best marketing approaches and techniques. This should be geared towards identifying effective means of making products successfully. Efficient marketing objectives will guide the organization in terms of performances, criterion and conditions. The objectives to be applied in marketing must be generated from the instructional analysis and will be applied at various stages of the product promotion.
Furthermore, businesses must compare the effectiveness of different marketing and promotional strategies to attract and boost their market dominance strategies that would enable them retain their loyal consumers. This will involve analyzing and reviewing the performance of all the marketing and promotional techniques that were applied in the past years.
