MARKETING MATERIAL
The direct objectives are:
1. Explanation of the learning processes emplkyed in the rest of the book.
2. Definition of what marketing is, and how it may be applied in the student's own experience.
3. Establishment of the customer as the prime focus of the organization, and of meeting customer needs as a prime function.
4. Introduction of the simple model of marketing as a dialogue between producer and consumer.
5. Discussion of the differences across industries, and especially between sales-oriented and marketing-oriented, and between product- and service-based, organizations.
6. Appreciation of the outlines of the marketing mix, in terms of the 4Ps.
The hidden objective of this chapter is to motivate students; to persuade them that the subject is important, and interesting - where many of them will only be taking it as part of a more general programme.
In addition to the direct objectives, it also starts to prepare students to be critical of unsupported theory, as well as starting to build a practical framework within which they personally may be able to place the marketing knowledge they gain.
In this first chapter much of the material is taken up with explaining what the book is about,its biases and, most importantly, how you should use it - together with what you should aim to get out of it.
The main focus of the chapter is on getting to grips with exactly what marketing is. What are the definitions of marketing? The chapter comes to the simple, but important, conclusion that the key focus of marketing must be the customer, and the key activity the 'dialogue' between supplier and that customer.
This chapter then explores the important differences between sales-oriented and marketing-oriented organizations- and those between product-based and service-based organizations (including those in the non-profit-making sector). A section on the marketing mix (often described in terms of the '4Ps' - Product, Price, Place and Promotion) introduces the sets of tools which are used by marketers to address the needs of the customer; and leads on to the specialized chapters in the rest of the book which describe these tools in more detail.
Much of this chapter is taken up with the 'administrative details' which we have already covered in chapter 0. You need to explain these to your students of course but, having selected the specific path you are taking, the range of options will be drastically reduced. I would suggest, in any case, that you leave these rather mundane details until later in the first lecture!
I have found that by far the best way to start the course, especially if you don't already know the students well, is simply to have them introduce themselves to you; in terms of their 'marketing' experience. It is useful to summarize this (already starting to introduce the idea of 'marketing research') on the blackboard or a flip-chart. This questioning can then be extended to their needs; what they want to get out of the course. Having summarized, and agreed their main needs (which you should then be prepared to meet as you progress through the course!), you should then ask them to define 'marketing' - and again write their answers on a flipchart. Discuss these answers with them and try to draw out a consensus.
Then you can introduce the first student acetate (1.02), which should be used by 'unveiling' the various statements;
[Acetate 1.02].
Marketing is human activity directed at satisfying needs and wants through exchange processes
This is the classical definition of marketing, given by Philip Kotler in his earlier editions. It perhaps betrays something of the economist's view ('exchange processes' is very much in this camp!). It is, however, very direct - and has worked well for many organizations. But what complications might you let yourself in for when you start to introduce marketing theory? Draw in your audience to this discussion.
Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.
This is Kotler's later offering, in his 1991 edition. It still has a flavour of economics, but starts to generalize the concept to include, for instance, non-profit organizations.
But what other viewpoints might be adopted?
[Acetate 1.03]
...competitive advantage. Without competitors there would be no need for strategy...
This is the very Japanese viewpoint offered by the leading Japanese strategist (Kenichi Ohmae who, though, works for McKinsey). It is very alien to Western views of marketing - though it has become increasingly accepted as a strategic viewpoint.
The Japanese came to the United States to study marketing and went home understanding its principles better than most US companies did.
On the other hand, Kotler (along with Liam Fahey) retorts that the Japanese learn their lessons well; and really are excellent marketers. Perhaps the truth lies somewhere in between; certainly the Japanese listen very well! There is the story of a certain Mr Toyoda who spent a number of months going round the US motor manufacturers in the 1950s, picking up all their secrets; and regularly agreeing that his name was very close to that of the Toyota car company - but not going further to explain that his family, which owned Toyota, had chosen a slightly different name for the family firm because they thought customers would prefer it.
Marketing is both a philosophy of business and a business function...
This quotation, from Michael Baker (of Strathclyde University), illustrates one potential area of confusion. As described in this chapter at least, marketing is a philosophy; equally applicable to all parts of the organization - and one of the key tasks is to get all parts to recognise the importance of marketing (and to commit to a customer focus). But is also, much more specifically, a department within the organization which handles - often in splendid isolation - the marketing activities. Much of marketing theory, and much of the rest of this book, relates to this functional aspect.
[Acetate 1.04]
Marketing is to establish, maintain and enhance long-term customer relationships at a profit, so that the objectives of the parties involved are met. This is done by mutual exchange and fulfilment of promises.
This is a recent European view, from Christian Grönroos. It encapsulates many of the recent developments in terms of partnership, especially those which emphasize the long-term nature of marketing relationships. This is an important contribution - since it looks to a new form of marketing: where organizations collaborate rather than compete (the traditional 'zero-sum' model of the buyer-seller relationship).
So, the situation is complex. Marketers cannot even agree on what their subject is!
At one extreme, therefore, it is best to put no boundaries on the topic. MARKETING SHOULD PERMEATE ALL PARTS OF AN ORGANIZATION, AND SHOULD BE TAKEN INTO ACCOUNT IN ALL ITS DECISION-MAKING. At this level it is best simply defined as 'customer orientation'; or even more simply as the 'customer'.
Having said that, the best definition to convey to your students at this time is usually the simplest practical one. They might remember that! The best approach we have found to describe the collection of activities that make up the functional aspect of marketing (which most of the student text addresses) is in terms of a dialogue. In the case of sales activities, which represent the major element of marketing in most organizations, the dialogue is almost the whole of marketing!
[Acetate 1.05]
LISTEN <> TALK
THIS IS PROBABLY THE MOST IMPORTANT LESSON OF THE FIRST CHAPTER, INDEED OF THE WHOLE BOOK. IF THE STUDENTS ONLY RECOGNIZE THAT THEY MUST ENTER INTO SOME FORM OF DIALOGUE WITH THEIR CUSTOMERS THEY WILL HAVE MADE A SOUND START ON BECOMING MARKETERS!
Perhaps the most productive approach is to switch out of lecture mode, literally switching the overhead projector off, and give them a lesson in basic salesmanship.
Activity
Ask one of the students to sell you something - 'to persuade you to buy it'; a pen, say. Ask the rest of the class to analyse what is happening.
The trick is to ensure that the student talks to ('persuades') you only - and you should remain taciturn. If he or she starts to ask you questions then you probably will have to (publicly) admit defeat and move to stage two.
This next stage is to ask the same student to find out what you want in a pen, say, by careful questioning. The key here is to end up by virtually specifying the pen that was on offer in the previous stage!
IN THE SUBSEQUENT DISCUSSIONS YOU SHOULD DRAW OUT THE IMPORTANCE OF 'LISTENING'; sales personnel are recommended to spend two-thirds of the time listening to what the customers wants and only one third talking. This is just as true of all other forms of marketing. In our experience this is already recognized by students: if you ask them to identify the definitive element of marketing they tend to choose (correctly, at least in this simple context) that of marketing research.
[Acetate 1.06]
Our research has shown that many managers place considerable emphasis on the aspects of marketing which impact the internal operations of the organisation. This, 'co-ordination' of the internal activities which lead up to the satisfaction of customer needs is an important function - but one which is rarely discussed.
Since it involves a range of very general topics, this is another subject where leading a discussion with students may offer a most productive introduction to the concepts.
This topic is optional, though we (at OUBS) use it as the starting point for Diploma students who have already studied an introductory course in the subject.
[Acetate 1.08]
1) Develop an understanding of what resources the organization has at its disposal.
2) Develop a suitable filter for marketing data.
These two points simply recognize that marketing is an essentially practical discipline, serving the needs of the organization - even if it addresses the needs of the customer to achieve that end. The point to be emphasized is that it requires a significant degree of expertise to be able to handle the technique properly. Most practising marketers do start there, but they cannot then shift their perspective to handle the real marketing viewpoint implicit in the third stage (and in particular in the fourth stage). It is, thus, better to start at stage three if you are not yet expert enough to be able to handle the whole process.
3) Using this 'filter' the marketer can move to find out about the customer.
This is traditional marketing as taught in most business schools, and in the student text!
4) Review the processes to date.
This is the most important part of the expert process. It is the ability to adopt new perspectives, which take account of the lessons learned in the earlier stages, which is the mark of a true marketer - though it has to be admitted that there are very few of these.
5) Manipulate the organization's resources to achieve the resulting marketing objectives.
The wider constituency of marketing, from brand management to inner marketing, is addressed at various stages throughout the rest of the book. This is the first introduction, though, of the concept that marketing (the function as much as the philosophy) is distributed throughout the organization - and needs to deploy resources which are traditionally not seen as being under marketing control.
Once more, this is optional; to be used to introduce more advanced students - since novices may be deterred by the complexity it describes. For the more expert, however, it is important to emphasise as early as possible the complexity of real life marketing - where much of the theory (and just as much of the practice) denies this.
[Acetate 1.09]
1) Multiple decision-makers
2) Multiple factors
These two issues are about complexity in general. In these cases, however, traditional marketing theory often assumes a basic simplicity which may not be borne out in practice.
3) Interaction
This is in some respects a recent addition. It is based upon the experiences of 'partnership', explored from the direction of purchasing by the large supermarket groups and from the sales end by computer suppliers such as IBM; where it is most obvious in account management programmes. It is a way of life for many Japanese organizations. But the process was always implicit in many marketing transactions, especially those in industrial markets. It was simply not recognized.
4) Timescales
This is perhaps the most important caveat about marketing theory. The descriptions in the literature largely reflect a snapshot of one point in time; without reference to history. In marketing practice it is possibly best exemplified by the agency approach to new advertising campaigns. The creative team develop their new approach, which will rectify all the shortcomings of the brand in isolation from all that has gone before - indeed positively shunning previous approaches which are tainted by failure (and, even worse for creative people, by being unfashionable!). On the other hand, it is interesting to note how many brand leaders have, very successfully, kept their advertising platforms unchanged (or changing very slowly) for long periods. Condor pipe tobacco did not change its successful marketing formula for a quarter of a century. IBM kept its formula largely unchanged for three quarters of a century; and only ran into difficulties when it did change it significantly.
This topic is introduced into the student text for two reasons: to illustrate a basic aspect of marketing theory and to provide a framework illustrating the main divisions.
The theoretical approach is analogous to that of the doctor. The marketer first of all will diagnose the problem by sorting the symptoms into various pigeonholes. For instance, the volume of sales doesn't meet budget: this is probably because the brand penetration is lower than target, and the shortfall comes almost entirely from younger women in the C1 class; so the remedy may be to increase spending in the most suitable media (say the Daily Mail).
A major danger, which it is worth emphasizing, is that this simple approach may become simplistic; and hide the true nature of the problem. There can be no substitute for an examination which ignores these preconceptions, and starts from basics. Pigeonholing is a convenient time saver, not a necessity.
[Acetate 1,10 and 1.10A]
These particular pigeon-holes cover the various types of industries/organizations which are supposed to have different marketing characteristics - though, as we will see later, the differences are less than might be expected. The best way to take these is to relate these to the specific experiences of those in the audience; by questioning them, and building up (on a flipchart) their view of what distinguishes (in marketing terms) each group.
Product or service
This is explored in more detail later. For the time being, the aspect to explore is likely to be the intangibility of services. At the same time it is important to establish that there are few pure products (mainly commodities) or services (consultancy perhaps). Most 'product packages' are a mix (of varying proportions) of both physical products and services. At one extreme, the humble baked bean (a commodity surely?) has been turned into a package by Heinz, where the heavily promoted image offers a service to purchasers by demonstrating, for example, that they are caring parents.On the other hand, financial services (possibly the most intangible of all) are now almost totally dependent upon the computer hardware involved; and this hardware has become very visible to the customer - and is often used as a major selling point!
It is also worth stressing that there are sub-categories; one example being FMCG versus consumer durables.
Individual consumer or corporate customer
This would seem to be a very clear split. Consumer goods are remotely promoted by advertising to groups of individuals. Industrial goods are sold face to face to buyers representing organizations.
But, as Leslie Rodger points out (approaching the problem from the industrial marketing perspective - whose practitioners have perhaps been the most vocal in claiming that major differences exist), the difference is one of the exact marketing mix rather than of basic theory. Refer back to the basic model of LISTEN <> TALK, which applies to both.
Profit or non-profit
This is often the major problem child. This comes about most obviously because of the, understandable, tight linkage between conventional marketing in commercial organizations and the bottom line profit. This linkage is a very effective driver in these organizations, but it is not an essential element of marketing.
[Acetate 1.11]
This list [1.11], from Kotler and Andreasen's text for non-profit organizations (explained in the student text), can be used to indicate why some of these opinions have emerged.
On the other hand, at least in our experience at OUBS, many managers in the public sector are now more interested in marketing than some of their commercial counterparts (Laura Cousins's fascinating observation that a higher proportion of non-profit organizations produce a formal marketing plan is perhaps indicative of the interest!).
Capital goods or consumables
This is where timescales (mentioned earlier) really do become important. The decision-making process thus becomes much more extended and complex. But it still follows many of the same rules; perhaps it is even arguable that the obvious complexity only brings to the surface the complexity which is hidden in other marketing situations; the complex sale may be seen as the general model, from which the sub-set of rules which apply in the FMCG areas are derived, rather than the specific exception to a generalized, simpler rule.
Intermediaries or end-users
There is a qualitative difference between end-users, described in the above categories, and those organizations which are involved in the distribution chain (which in a service economy may well represent a large part of business activity). Their relation to the 'product' is clearly very different, much more mercenary, than that of the end-users. But, once again, the basic rules of marketing still apply.
HIGH-TECH - this may also be introduced as a separate category, because of the rapid rate of change and high level of uncertainty. Again the basic principles apply, but the special characteristics can lead to equally special application of the techniques; with management of the 'life-cycle' (but here directly under the control of the manufacturers - the reverse of traditional theory) now a major feature.
SMALL FIRMS - these really are a special category; simply because they do not usually have the resources even to consider deploying most marketing techniques. The basics remain the same, of course, but most small firms have to accept a very low level of implementation indeed. This will probably pose no direct problems on your course; where the numbers of students involved with genuinely small firms will probably be low. It may, though, pose some indirect problems (especially from MBA students) where they often hanker after setting up their own (small) business. This is perhaps best addressed by putting it in the context of 'internal marketing' (where marketing resources are similarly constrained), which is covered by the student text.
This approach, encapsulated in the 4Ps, is now traditional. It comes as something of a shock, therefore, to realize that the 4Ps framework was proposed by McCarthy as recently as 1981. It is an artificial framework and, despite its widespread acceptance, poses as many problems as it solves. It is, however, a very convenient way of splitting up the large amount of material which has now been generated in marketing theory - which is why, very approximately, it has been followed in this student text!
[Acetate 1.12]
The aspect of the 4Ps which is often forgotten, but which is significant, is their pairing. The first two (product and price) are product related - and really could be reduced to one (where price is just one of the range of factors, and according to successful brand managers an unimportant one, which make up the product - but economists have raised it to a higher importance than the others). The other two (place and promotion) are parts of the delivery system. Place is a horrendously clumsy name (but that is the price to be paid for an easily remembered title). Worse, it represents a catch-all, some of whose parts (such as logistics management) seem to have very little relation to 'place'.
If you want to illustrate how the concept can be developed (shades of the 4Ps discussed at the beginning, in the context of marketing theories) then the addition of the three more by Booms and Bitner may help to explain (or simply to confuse) the situation in the service sector!
The main problem is that the 4Ps have come almost to be accepted as the natural order of things. In fact they are very unnatural indeed.
[Acetate 1.14]
This alternative framework, by Godley, is more complex (with ten elements) and, coming from several decades ago, does not cover all the topics we would now include in marketing. Even so, it gives a more comprehensive (and less gimmicky) feel for what makes up the field of marketing. It may lack excitement, but it is honest!
Probably the main fault arising from the use of the 4Ps is the total lack of the consumer focus. There is no mention of the customer - despite the fact that he or she is supposed to be central to marketing theory! Students have to be aware of, and make allowance for, this bias when using the 4Ps framework. In terms of a teaching approach, it is probably best - and most memorable - to simply ask them what important aspect of marketing is left out of the 4Ps; the chances are (unless they have done their homework and read the student text!) they will think of the customer last of all!
Arguably a better model is that of the 'product package', which integrates the extended range of product-related factors (including promotion and distribution). This explored, in particular, in the later - especially important - sections on product positioning.
Perhaps the longest-running debate in marketing has been that with the sales profession. This is now so well known that it can become something of a cliché. The best approach, therefore, is to let the students define the differences for themselves; with your own contribution being to chair the discussion, and write the comments on the flipchart.
[Acetate 1.15]
This diagram (figure 1-7 from Kotler's Marketing Management page 17) nicely encapsulates the important differences; and can be used as a summary of the class debate.
Alternatively, the argument can be summarized in terms of the alternative organizational structures;
[Acetates 1.16, 1.17 and 1.18 ]
Clearly the key to the comparison is where the marketing function reports, and the level at which it does this. It might not be unreasonable in a truly marketing-oriented organization that the CEO also comes from the marketing function (but this is perhaps unlikely, where finance is king in many organizations).
The theory of marketing has by now been generally recognized; and few organizations would be bold enough to state that they were not committed to it. Unfortunately, the practice is very different; only a minority of organizations genuinely implement marketing. The majority follow 'coarse marketing' - described later in the text - which is a very hit and miss affair; with no planning, little thought and practically no resources devoted to marketing - as opposed to those given over to the traditional sales approach (but here renamed marketing). A rather more dynamic, but often eccentric, approach is that of 'conviction marketing', again described later. It may be the most successful approach of all but, with little input from research, it is also especially risky.
How you introduce this topic will depend upon how it is taught elsewhere, on other courses. But the strategic context for marketing needs to be introduced early. Some other texts include it at length in the introduction - complete with the related marketing plan. This provides the best context for later work. Unfortunately it also can be confusing for students, who have not yet seen what goes into the plan and can devalue the planning process (since they have forgotten about it by the end of the course). This text takes the opposite approach, building up to the 'climax' of the marketing plan. Even so, some context needs to be introduced at this early stage - and corporate strategy seems the best vehicle - but the decision has to be up to you. The following acetate, from the student text, may help.
[Acetate 1.19]
At this point you may wish to indicate to the students how your teaching, and in particular the order of topics, will relate to that in the student text;
This section is located at the end of chapter 1 because it will apply only to a proportion of students. On the other hand, it is likely that its comments on the service industries will apply to at least some of the students in your class - and it is important to make them understand as quickly as possible that marketing applies just as much to them. Not least, in order to defuse, as soon as possible, the potential criticisms from those in these service industries - who often claim that their problems are totally different)
The starting point must be the oft repeated statement in this chapter that all industries largely share the same marketing theories. There are, though, some cultural features of services which mean that they may seem to adopt a very different approach to marketing.
[Acetate 1.21]
Lack of tangibility
This is usually the main factor. It is simply not possible to touch the product - and this means, for instance, that it does not call out for promotional messages to be attached to it.
Lack of 'mass' marketing
Many services are based upon a branch network, which offers major advantages in terms of customer contact, but means that central functions (which marketing traditionally is) may be neglected.
Lack of direct competition
Professional status
These two factors have often removed the need for promotional activity (and have even acted against it), and this has led to a neglect of - and often the deliberate undermining of - management techniques in general.
Lack of management
These cultural differences are seen in their most extreme form in the case of non-profit organizations.
[Acetate 1.22]
This is included here for the sake of completeness. It is best approached anecdotally - the usual reference is to Procter & Gamble who invented the structure in the 1930s, and are still the leaders. It is, in any case, optional.
It was at its peak in the 1960s, when its integrating function - cross-functional management - was a bonus to be added to its prime task of controlling the work of the outside marketing contractors (especially advertising agencies, where there was less emphasis on sales promotion) as well as producing the product plans.
In recent years the concept has been broadened to include cross-functional teams, rather than the individual brand manager. Less productively, perhaps, it has also been narrowed - to 'category management' - which focuses on the needs of the retailer rather than the consumer!
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