By Prof. Robin
Peterson
Marketing is not static. Rather, it often
changes dramatically; sometimes slowly and frequently in ways that are difficult to
predict. Those business which are able to detect and predict changes are in a superior
position to prosper and grow. Firms such as Microsoft have used marketing as a recipe for
success.
Why are some firms so successful
while other fail? Increasingly it is because the winners realize the power of marketing.
We will explore just how marketing is evolving.
First, marketing is becoming present
everywhere. It can be found in all societies because all desire to take advantage of its
promises. Even not-for-profit organizations are seizing the potential of this force.
Charities use it for fund-raising; governments use it to acquire citizen patriotism;
political parties employ it to attain followers; and performers in the cinema use it to
acquire fame.
Second, marketing has evolved from a
function into a philosophy. It is no longer seen as merely a responsibility of the
marketing department within a company. Instead, all employees are required to conduct
themselves in ways that satisfy target customers. Production workers must manufacture
products that satisfy customer wants, finance personnel must provide the company with
sufficient funds and take steps to allow customers to purchase company brands, engineers
must design products that are wanted by customers. All are guided by the philosophy that
the customer comes first.
Since marketing is a philosophy, it
is the duty of the marketing department to sell marketing to all company employees, that
is, marketing must convince all employees that they are in business to satisfy target
customers. This is called marketing to employees. In a sense, these employees are
customers.
Third, marketing is now global.
Companies must reach beyond their countries’ boundaries and seek markets in foreign
lands. Even small firms can do this. Nepal has a wealth of resources and a pool of
resourceful, intelligent, and hard-working people. It can use these assets to engage in
global enterprise and bring further prosperity to its people. But it must continually
strive to meet competition from other lands.
Fourth, the Internet is a rising
reality. It is becoming increasingly important. More goods will be sold and more business
will be transacted over this medium as time passes. An increasing number of computer and
Internet knowledgeable employees will be needed. Nepal seems to be moving in this
direction. There are numerous schools and institutes providing instruction in this area,
and many of its youth are intelligent and motivated. These are necessary and positive
signs.
But this is not enough. Many dot com
companies that have failed miserably in the recent past were full of personnel who were
computer geniuses. Yet they failed. Why? Because successful marketing requires knowledge
of how a business must operate to satisfy its customers. The dot coms often did not do
this. They just created web-sites and waited for the money to come in.
I believe that the wave of the
future in Internet and in all marketing is students who are well-educated in marketing
theory and practice, especially at the MBA level. The MBA is the key to success. The
students of Kathmandu University School of Management (KUSOM) are fortunate to have a
well-conceived and administered MBA program at the School. Graduates of this institution
can lead business firms in the directions required by evolutionary marketing. I have
become acquainted with a number of these students and am convinced of their potential.
A fifth form of marketing evolution
is that well-managed companies scan the environment to detect trends. In turn, the most
significant environmental components are the social, technological, economic, political,
and competitive settings. Each of these must be monitored as they continually change.
In the past, most firms conducted
marketing research as a forerunner to making major decisions. This is still the case to
some extent. However, many have found that environmental scanning is superior to marketing
research as a guide to decision making on new product development, branding decisions,
pricing, advertising, and physical distribution. Environmental scanning can detect trends
in their earlier stages. It can generate relevant information in a manner that is less
expensive than marketing research. And it allows the company to take advantage of the
judgement and experience of company’s middle and higher managers.
A sixth form of evolution is that
supply chain management is becoming increasingly important. Products must be stored and
delivered in such a way as to provide efficient and effective movement of goods through
the channels of distribution on their way to customers in a manner that minimizes costs
and maximizes customer service. This must be done because numerous competitors have
developed expertise in supply chain management and their efforts must be duplicated. One
of the reasons why Wal-Mart and Microsoft are so successful is that they have excellent
supply chain management. Many of the dot com companies which have gone into bankruptcy can
blame their weaknesses in this field for their failure.
A seventh form of marketing
evolution is that brand equity – the value of a brand has been recognized as one of
the most, if not the most, valuable assets owned by the company. Coca-Cola, Nissan and
Proctor and Gamble are mainly valuable because of the brands they possess and not because
of their physical plants, properties, funds, and personnel. And researchers have
discovered scientific means of measuring brand equity in monetary terms.
An eighth form of marketing
evolution is that new products are vitally needed by every firm. Most of the profits of
well-managed firms come from new products. Customers demand novelty and competitors are
continually producing new offerings which must be matched.
New products introduced by a company
must be differentiated from those of competitors; that is, they must offer better quality,
superior service, lower price, better packaging, or some other bundle of superior
components. ‘Me-too’ products do not survive for long in the market.
A ninth evolutionary trend in
marketing is the need to get new products to market very quickly. Nissan is very
effective, in this regard, it can bring new products to the market in half the time that
is needed by Diamler Chrysler. Fast new product introduction generates longer revenues,
less financial risk, more consumer loyalty and lower costs than does slower introduction.
It enables the company to become a pioneer in the industry, thus enhancing its status.
Through well-conceived planning and control measures, non-bureaucratic forms of
organizations, and effective employee incentives, new products can be brought to market in
an expedient fashion.
A tenth evolutionary trend in
marketing relates to market segmentation. Target groups in different countries are
becoming increasingly similar. A teenager in Kathmandu shares many of the clothing, food,
music, entertainment, and other preferences with teenagers in Los Angeles, London, Tokyo,
Berlin, and Hong Kong. Similarly, a middle level manger in Bangkok is similar in many
consumption styles to a middle level manager in Paris.
These similarities allow companies
to introduce products and brands into multiple countries, and to utilize master marketing
plans in these countries. Rather than segmenting the market geographically, companies can
segment across countries by such variables as age, income, occupation, psychographics
categories, and benefit categories. In turn, this can allow the firm to develop global
brand equity while minimizing production and marketing costs.
An eleventh form of evolution in
marketing is customer demand for both high product quality and low cost, though neither of
these two attributes is sufficient by itself. This necessitates quality product management
and measures designed to control costs. This can come about only if marketing personnel,
engineers, production personnel, finance personnel, and research and development
operatives closely coordinate their efforts toward the dual goals of high product quality
and low costs. This is a very demanding task-one that is frought with obstacles, but can
be achieved.
A twelfth form of marketing
evolution is the need to spend money on marketing, product development, advertising,
personal selling, channels of distribution, supply chains, and other functions. And, most
importantly, these expenditures should be viewed as investments and not as expenses. Many
firms that have attempted to economize by cutting back on marketing expenditures have come
to realize that they were only penalizing themselves.
A thirteenth form of marketing
evolution is that relationship building with customers is becoming more vital. Customers
prefer buying from companies with which they can identify. Management must create a
climate whereby target customers feel that they have positive long run association with
the firm. They will do this only if they become aware that management is interested in the
long run welfare of the customer and is not solely motivated to make profits.
Relationship marketing is closely
associated with revenues and costs; most companies receive the bulk of their revenues from
repeat customers. It generally costs seven times as much to win a new customer as it does
to retain an existing customer.
A fourteenth form of relationship
marketing is the increased interest in green marketing on the part of consumers,
government, non-profit organizations, media and companies themselves. Many consumers have
become aware of the dangers inherent in air pollution, water pollution, destruction of the
scenic landscape, over use of non-replaceable resources and population explosion. Such
consumers, a growing group, favour brands which are ecologically compatible and companies
which are ecologically responsible. And they will direct their purchases accordingly.
A related trend is that many
managers do not choose to take ecologically correct actions, not just because this will
result in more sales, but because they believe that this is the ethical way to conduct
themselves. They are guided more by their morals than by self-interest.
A fifteenth form of marketing
evolution is called "consumer-centric marketing". This involves designing
products to meet the specific needs of individual consumers. A company in Japan will
produce a custom-made bicycle that is of the exact size and possesses the exact physical
characteristics as are desired by specific consumers. And the prices charged by these
companies are competitive. Modern computer-driven production facilities permit the
manufacture of such products at low cost. The Internet provides an excellent vehicle for
this form of marketing since customers can specify the characteristics of the products and
services they want through the electronic medium.
Consumer centric marketing is the
ultimate form of market segmentation. Coupled with relationship marketing, it can generate
a very high level of customer loyalty.
A sixteenth form of marketing
evolution is the employment of marketing personnel in project teams. In the past, most
decisions were made by marketing personnel only. This pattern is changing.
Decision-making, especially in new
product development and existing product management, is increasingly conducted by project
teams. These are made up of managers from diverse departments, such as marketing, finance,
engineering, production, purchasing, and human resource management. This format helps
provide decision making based upon inputs from different functional areas. It also enhance
company wide organization coordination and cooperation.
Marketing executives then, must be
trained and oriented so that they can operate as team members rather than just as
individual decision-makers. This transition is essential.
A seventeenth form of marketing
evolution is the increased intensity of competition in every industry. No firm is spared.
Each one must constantly be alert for new competitors and changes in the strategies of
existing competitors. It is extremely dangerous to assume that the status-quo will
persist.
The personal computer market
demonstrates this phenomenon. Once dominated by IBM and Apple, it now has numerous
competitors, all of which are engaged in cost cutting, price reductions, quality
improvement programs, and expensive promotion. Price wars have deflated profits to very
thin levels and prospects for the immediate future are not bright.
An eighteenth form of marketing
evolution is that many firms are discovering that they can achieve higher profits by
selling services than by selling goods. Many service industries are not overly
competitive. Efforts to differentiate services are often more effective than those used to
differentiate physical products because of the intangible nature of service and their lack
of standardization.
Many companies are making full or
partial transitions into services. IBM, for instance, now receives larger revenues from
services than it does from software or hardware. Boeing, now, has a training division that
provides employee-training services for numerous companies, both within and out of the
aircraft and space industries.
A nineteenth form of marketing
evolution is the use of specialized hardware and software in numerous applications;
mainframes, personal computers, laptops, notebooks and other forms of hardware are widely
employed. Software is available for virtually every marketing function, including sales
forecasting, sales training, order processing, and advertising media selection.
While the hardware and software are
of immense value, it should not be forgotten that these tools only supplement judgement
and decision making but do not replace these functions.
A twentieth form of marketing
evolution is the increased importance of being flexible. Companies of the past made long
range and short-range plans and attempted to abide by these plans. This can no longer be
the best course of action, because the environment is constantly changing. What is needed
is an organized effort to monitor the environment and company commitment and capability to
react effectively to major events as they unfold.
A twenty-first form of marketing
evolution is that firms are discovering that profit making is a more essential objective
than pursuing larger shares of market. Some companies, such as Ford, have bought market
share by price-cutting, consumer incentives, and extensive promotion programs. But
increasing share of market has led to deteriorating profits, placing the company in
precarious position. Its stock value has suffered accordingly.
Unfortunately, many management
gurus, consultants, and professional journal writers have over emphasized the importance
of share of market as a goal. Excessive pursuit of this objective, however, can be very
dangerous.
A twenty-second form of marketing
evolution is recognition of the importance of entrepreneurship. For each nation, this
business activity is essential for prosperity. For individual firms, it is essential for
growth. Many large companies, such as General Electric, attempt to reap the benefits of
entrepreneurship by creating smaller companies within their larger companies. In this
manner, the large firm can become flexible and responsive to the needs of the market.
If the claim advertised by Chaudhary
Group is to be believed, Wai Wai brand of instant noodles produced in
Nepal are now available also in Bangkok and Hong Kong, though the packaging
of the product available abroad will look different from that available
in domestic market.
Following
a 50% increase last year, the Nepali market for bikes seems to be gearing
up for more competition this year. While Japan’s Yamaha that recently
acquired 100% shares in its Indian subsidiary - Yamaha Motor India Ltd.
- has given full page newspaper ads promising to come with more attractive
models soon, more of Chinese brands are rolling into the country one after
the other.