MARKETING  MATERIAL

9430 Marketing Chapter 1

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The first edition and the US edition

INTRODUCTION

1 Introduction

Thank you for giving up your time to read what I have to say

about marketing. In return, I trust that you will find that it

will represent a worth-while investment of your time as well as

offering an interesting (and possibly enlightening) experience.

Marketing is perhaps the most fundamental activity of any

commercial organization and an essential discipline even in non-

commercial organizations. It is also a fascinating and hugely

enjoyable subject.

Preamble

At the beginning of each chapter in this book there will be a

short introduction, which summarizes the main themes of the

chapter. Needless to say, 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. It also offers some

words of wisdom about handling advice from experts, including

that published in textbooks such as this. Apart from this, the

main focus of the chapter is on getting to grips with exactly

what marketing is. What are the definitions of marketing? How

does it differ from economics, where the `market' has now been

espoused as a favourite term by politicians as much as by

marketers? 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.

There are some differences between the marketing techniques

employed by different types of organizations although the

similarities are usually more important. In particular, this

chapter 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 `4 Ps' --Product, Price, Place

and Promotion) introduces the sets of tools used by marketing to

address the needs of the customer and leads on to the specialized

chapters in the rest of the book, where these tools are described

in more detail.

This book is a comprehensive introduction to marketing. It covers all functions and all types of organization. Indeed, the wide

coverage is designed to allow material to be selected to meet

your specific, individual needs --across a very wide spectrum of

organizational situations. It also makes the basic assumption

that you may not be currently involved directly in the marketing

function itself, and may not previously have had any significant

exposure to the theory or practice of the subject. Even so, the

coverage is intended to be sufficiently comprehensive to also act as a

reference source even in the most demanding of contexts and

should equip you to meet most practical marketing requirements.

Theory and Practice

The book also allows for those who may be practising managers,

and who are learning about the theory of marketing in their spare

time. Such practising managers have the great advantage of

immersion in a real-life case study --the workings of the

organization in which they operate. To tap the power of such a

pragmatic approach in the book --which has been developed on the

basis of practical experience with many thousands of students who

have passed through the Open Business School marketing course --

a wide range of very practical exercises has been developed.

These exercises are based on continuous reference to a single

organization. This organization may be the one in which you are

currently working or one which you know about, or simply one

which has been well documented as a case study. The exercises are

of varying degrees of complexity, from the simplest of questions,

which requires only an immediate `yes or no' answer, through to

formulating a complete marketing plan.

In line with its emphasis on practicality, the book will offer

the various theories only as tools to be used when applicable; as

aids to understanding the customer's real needs, and what may be

done to satisfy them. It will critically examine the theories in

the context of what they may offer the practising manager.

Indeed, it will approach each subject as if you were a practising

manager.

In line with this philosophy, the book will, as far as possible,

suggest which of these tools might be of most use in a given

situation. However, it will stress that there are probably

several tools which are equally applicable to the

situation; each of which offers a different framework for your

own individual analysis.

Yoram Wind - 1- states that: 

Marketing as a discipline can provide few generalizations,

`principles', or `laws'. The major contribution of the marketing

discipline is in its approach to problem identification

and solution.

This is a view with which I would concur. The essence of this

book is marketing practice, and theory is used to provide

no more than a useful framework.

Unfortunately, rather less than half a century after the birth of

marketing as a widely used practical tool of management, too many

marketing theorists appear to be hungering after academic

respectability and scientific accuracy; they are beginning to

adorn their work with esoteric mathematical approaches, although

the subject, as practised, remains just as determinedly `fuzzy'

as it ever was.

Quinn et al., - 2 - in the introduction to their

splendidly eclectic handbook on strategy, also make the point

that:

We do not apologize for contradictions among the ideas of leading

thinkers. The world is full of contradictions. The real danger

lies in using pat solutions to a nuanced reality, not in opening

perspectives up to different interpretations. The effective

strategist is one who can live with contradictions, learn to

appreciate their cues and effects, and reconcile them

sufficiently for effective action.

These contradictions will be explained, I hope productively,

throughout this book.

In any case, much of marketing practice is pragmatic (that is,

based upon what has been shown by experience to work) rather than

being what theory would prescribe. Lilien and Kotler -3-

report that:

Marketing people often say that marketing experience is the best

teacher, that planning and performing a diversity of marketing

activities --selling, pricing, advertising, servicing --create

sound judgment about what will work and what will backfire.

Unlike some other authors, I will not pretend that there are grand theories which will magically unlock the inner secrets of the subject and can be applied equally to any marketing situation. Indeed, the most important of contributions to marketing 'theory' have often been practical rules of thumb derived from observation of what really works; since these usually turn out to be the most useful guides of all - perhaps precisely because they are honest about their limited ambitions to offer a framework for investigation rather then a predicted solution! Thus, I believe such 'rules of thumb' typically offer the most useful help to practitioners because they are immediately of use in building upon those managers' existing skills and knowledge - whilst clearly highlighting the limitations behind their use:

PRACTICAL HELP - 'rules of thumb' are derived directly from practical experience, and aim only to help the reader benefit from that experience. They also have a history of working in practice, which reduces the risk involved in implementing them.

IMMEDIATE (EASE OF) USE - 'rules of thumb' are, and need to be, inherently simple. In general they should be no more than one or two sentences long (or a single diagram) - so that the reader can immediately understand what they are saying; and can quickly put them into practice.

EXISTING SKILLS AND KNOWLEDGE - they build upon the practical skills and knowledge that the manager already possesses, rather than trying to override this, and typically develop a common-sense perspective - while still stimulating the development of real insight - which empowers the manager to deploy his or her own best judgment

SPECIFIC SOLUTION(S)- they directly relate to the unique situation facing the manager, which only he or she can solve and to which outsiders can only contribute general ideas, which is why they have to be empowered to confidently handle the related decision-making.

RECOGNISED LIMITATIONS - even more important, users recognise that 'rules of thumb' are not perfect (as traditional marketing theories often claim to be). They are, justifiably, seen as approximations which will probably help in most (but not all) situations. A realistic awareness of the limitations on what you may do is as important in marketing as that of recognising the potential awaiting develo0ment.

Such rules offer the most realistic approach to most marketing problems; but nobody should expect to apply each and every one of the rules to every situation facing t(em. They provide, in effect, an extended menu from which the user selects just those few rules which apply to a specific situation. This book offers many such rules - though they are too often called theories - to match the many situations which over time face marketers. To do otherwise would be to short-change the reader. Despite the hype generated by those selling simplistic panaceas which are claimed to have universal applicability, there are no universal rules in marketing. There are only the best rules of thumb for the specific situation. That is why it is such an endlessly interesting subject, and why marketing professors are not millionaires!

Coverage

The book attempts to cover almost all of the most important

theory, and related practice, in the whole marketing discipline.

Where possible, it attempts to supplement this coverage at a

deeper level. This is because much of the understanding of

marketing comes from an in-depth appreciation of the individual

techniques --and the basic customer needs that they address.

As with almost all management education, the theory you learn

from this book will not alone make you a qualified marketing

manager. For that you will also need relevant practical

experience. However, it should give you a good feel for what

marketing is about, and help you to talk sensibly and

productively to marketers in their own language. Most important

of all, though, is that it should provide you with a set of

generally applicable tools which you can use in your own work.

AUDIT 1.1

At regular intervals through the book I shall ask a series of

questions in order to conduct an `audit' on an organization of

your choice. The prime objective in asking these questions will

obviously be to consolidate the theory which has just been

taught, by requiring you to apply it in practice.

How much effort you put into this depends on you. Some of the

questions will be easy to answer. Some may be very difficult

because of the way your organization operates. If a question

requires a disproportionate amount of work then ignore it or make

some reasonable assumptions instead. This `Audit' is fortunately

not a life-and-death exercise.

The questions will not, however, be totally independent. They

will gradually build up to give a picture of one aspect of the

organization, and ultimately of the whole organization, which may

be as valuable to you as the theory you have learnt in the

process. At times I shall suggest that you conduct more major

exercises, to bring together the material you have collected in

your answers to the previous questions, and to give a more formal

report on that aspect of the organization. This will eventually

lead to the complete marketing plan.

I suggest, therefore, that you write the questions and your

answers in a separate exercise book, with a page for each

question.

The first questions will be about you:

Why are you studying this book? (Alternatively, if the book forms

part of a taught course, why are you following the course?)

What are your objectives?

What will you hope to have achieved by the end of the book (or

course)?

What extra knowledge or skills do you want it to provide you

with?

Write down your answers. When you have finished this book come

back to these answers and see if the book has achieved not just

what I have set out to do but also what you wanted it to do. In

marketing the customer --in this case you --is king.

It is often quite difficult to put down in words exactly why you

are doing something and what your objectives are, but that is one

of the generally applicable lessons of marketing. Before you

invest considerable time and effort in anything, think through

your objectives fully. Here are some of the objectives that

students have previously had in studying such material:

to obtain a qualification

to understand what made marketing so important to their

organization

to be able to talk to those who carried out the marketing

functions

to be able to work in partnership with those in marketing

to be able to provide the best customer service

to add to their set of management tools

(Those of you who are in full-time business education will not,

of course, have the `luxury' of your own organization to study.

Fortunately you will, on the other hand, benefit from the support

of your marketing lecturer --who will more than compensate for

this shortfall. In this situation you may be advised to use

specific case studies for each set of `Audits', although such an

approach will not build up to the overall marketing plan.

Alternatively, you may be encouraged by your lecturer to use your

previous experience (with a previous employer, perhaps in

vacation employment) or to use one of the thoroughly documented

`single-case studies'. Whatever the outcome and whatever your

choice of approach, the later `Audits' will continue to refer to

`the organization'.)

Aims and Objectives

The aim of this book is to provide a comprehensive introduction

to the theory and practice of marketing, for both non-specialists

and newcomers to the discipline.

By the time you have completed the main sections, you should:

appreciate why marketing is so important for most organizations,

and what this means for their operations

understand the basic principles and main theories of marketing,

together with how these may be applied in practice

recognize the limitations of such theories, and the practical

remedies which may help overcome them

be able to understand the language used by marketing

practitioners, and assess the merits of their recommendations

be able to apply relevant marketing concepts and techniques to

the more general, departmental, problems elsewhere in the

organization

A Brief History of Marketing

Marketing has been in existence for a number of millennia; ever

since people first started to barter the surpluses they had

accumulated. For most of that time, though, it has been seen as a

peripheral activity; because, in subsistence economies, such

surpluses represented a relatively small part of the total.

After the Industrial Revolution made such surpluses more

commonplace, the `marketing' of these became the province of the

`salesman', with his specialized skills.

Jones and Monieson - 4 -  suggest that the first academic

discussions of `marketing' can be traced back to the turn of the

century; to, for instance, the E. D. James series of articles in

 'Mill Supplies ' between 1911 and 1914.

However, in the wider sphere of  'practical ' business

management, it was only after 1945 that the newly fashionable

advertising agencies began to redefine the discipline in a way

which came close to the modern concept of marketing. The 1950s

may be seen as the decade of advertising: the influence of the

agencies peaked and their clients appointed advertising managers

to control this newly discovered resource.

Indeed, it was arguably only at the beginning of the 1960s that

marketing in its modern form, based upon a customer focus (in

particular, making extensive use of market research to

investigate customers' needs and wants), emerged on the scale

that we now witness. This decade represented the heyday of the

`pure' marketing manager -- and, especially, of the few pioneers

who became brand managers, at the pinnacle of a new profession.

Almost all of these pioneers, however, practised techniques which

had been learned by a practical apprenticeship, rather than by

the study of classroom theory.

The discipline matured in the 1970s as, led by Philip Kotler's

seminal text  'Marketing Management ',- 5 -  first published

in 1967, the ideas which had developed from practical experience

were codified. Marketing became `routinized' as an increasingly

important function of management. Wolf and Smith- 6 -  chart

another aspect of marketing's progress during this time: `... the

influence of the field waned in the turbulent 1970s when

strategic planning ascended. This change forced management to

concentrate on reacting to environmental changes and

consolidating competitive positions to conserve scarce

resources.' These are elements which have now been incorporated

into modern marketing.

In the 1980s, however, marketing lost much of its previous self-

confidence. Not least in terms of the new ideas being developed,

the attention moved to more aggressive techniques with a more

immediate payback; including derivatives of those developed by

Michael Porter - 7 -  in his  'Competitive Strategy ' which,

however, conveniently ignored his longer-term perspectives.

We can summarize this historic progression diagrammatically:

as shown by Warren Keegan - 8 -  who summarized the changes as follows:

By 1980 it was clear that the `new' concept of marketing was

outdated and that the times demanded a strategic concept. The

strategic concept of marketing, a major evolution in the history

of marketing thought, shifted the focus from the customer or

product to the firm's external environment. Knowing everything

there is to know about the customer is not enough. To succeed,

marketers must know the customer in a context which includes the

competition, government policy and regulation, and the broader

economic, social and political macro forces that shape the

evolution of markets.

As the recession at the end of the 1980s hit company profits, marketing activity - correctly seen as a long-term investment (but incorrectly seen as expendable in the short-term) - was often reduced as part of organisation-wide cost-saving measures. The attention, indeed, moved back to internal activities, where cost reductions - the new focus of senior management - could most easily be made. As the general loss of confidence continued into the 1990s - even after the recession itself had finished - marketing continued to take something of a back seat in many organisations.

Beneath the surface, however, there was significant activity at the leading edge; and support for some of the most cherished theories was being discretely downgraded. The battle for (management) minds had already been won; apart from a small minority (less than 20%) in the public sector who remained convinced that they knew what was good for their clients, the vast majority of managers accepted - without reservation - that the customer's needs and wants had to be paramount; even if - as was typically the case - they then did not know what to do to implement this philosophy!

In academic circles, at least, the leading edge researchers were questioning the viability of the main predictive models - including such basics as the Product Life Cycle[1] and Boston Matrix[2]. It was suggested that these were often misleading, and should be replaced by more practical, and pragmatic, theories which aimed to offer practitioners a framework for decision-making. Thus, when business confidence rebounds, as it inevitably will in the second half of the decade, it seems likely that this more practical approach may come to the fore; not unreasonably when, as our own research shows, managers want - above all - practical frameworks to help them take the decisions rather than predictions to usurp their role. It is, therefore, this philosophy - empowering managers to take their own decisions - which permeates much of the thinking in this book.

ACTIVITY 1.1

As we go through the book I shall occasionally ask less rigorous

questions which are independent of the organization, and which

will not build on one another.

The first of these `activities' will test your appreciation of

the relation between marketing and economics. The question to be

answered (without a great deal of research) is:

How would  'you ' define `the discipline of the market'?

Is it something remote, impersonal, which does not directly

affect your life; one of those grand phrases which you read in

the newspapers, but which seem to have no bearing on everyday

life? Or do you automatically think of a political explanation,

in terms perhaps of the traditional confrontation between right

and left? Or do you think of economics -- and, possibly, rather

esoteric theory? Or is it something which impacts directly upon

your business life?

We will return to address this question from the viewpoint of

economics in chapter 4.

What is Marketing?

Even so, despite wide acceptance of the overall concept, marketing is a widely used term which is often very misused and

misunderstood -- it has come to mean many things to many

different people.

ACTIVITY 1.2

To set the context for what follows, by getting you to appreciate

your preconceptions or prejudices, the second question is

deceptively simple:

What is marketing?

The Essence of Marketing

The definitive answer (or, as it will turn out, answers) to the

question `What is marketing?' will occupy several pages. But the

essence of what marketing is, even if it is not a complete or

definitive description, can be drawn out as follows.

 'The key aspect of marketing is an attitude of mind. It

requires that, in taking `marketing' decisions, the manager looks

at these from the viewpoint of the customer. These decisions will

thus be driven by what the customer needs and wants '.

Much of what management does is concerned with taking decisions

which revolve around how the products or services of the

organization can be made to match the customer needs and wants;

the definitions which come in the next section allow for this.

But the most difficult part of marketing, the key to success, is

that of adopting that customer's viewpoint. Tom Peters, the co-

author of one of the best-selling management books of all

time - 11 - , puts it more dramatically. He states that if you

simply offer your customers the normal courtesies then you will

start out ahead of most other organizations.

The next section explores a range of the more complex definitions

of marketing. This at first may seem confusing. The intention,

though, is to illustrate the spectrum of opinions and by this

process to build up a picture of what marketing practice is

likely to cover.

Definitions of Marketing?

The classic Western definition, summarized by Philip

Kotler - 12 -  is:

Marketing is human activity directed at satisfying needs and

wants through exchange processes.

It is a complex issue, however. Even Kotler, who is one of the

acknowledged leaders of marketing theory, has found the subject

increasingly complex; for by the seventh edition of the book

(1991) his definition was elaborated to:

Marketing is a social and managerial process by which individuals

and groups obtain what they need and want through creating and

exchanging products and value with others.

In the UK a very similar definition was given by the Chartered

Institute of Marketing:

Marketing is the management process responsible for identifying,

anticipating and satisfying customer requirements profitably.

Marketing theory, like much business theory, is far from an exact

science. There is always scope for different interpretations. For

example, Kenichi Ohmae - 13 -  says of Japanese business

strategy in general:

What business strategy is about -- what distinguishes it from all

other kinds of business planning -- is, in a word,

 'competitive ' advantage. Without competitors there would be

no need for strategy, for the sole purpose of strategic planning

is to enable the company to gain, as efficiently as possible, a

sustainable edge over its competitors.

To some Western ears this is a very aggressive interpretation

(even if it does chime with the widely accepted views of Michael

Porter) - 14 -  and it does not directly mention the `customer'

at all. But even here `competition' implies that the customer is

king; since he, and he alone, can decide the  'winner ' of the

competition.

This is, however, probably an overstatement. Kotler and

Fahey - 15 -  make the following important observation:

Japanese marketing strategy, strangely enough, is not based on

the discovery of new and fresh marketing principles. Japan's

secret is that they thoroughly understand and apply the existing

textbook principles. The Japanese came to the United States to

study marketing and went home understanding its principles better

than most US companies did.

A very different approach to the `competitive' Japanese view was

taken by some writers in the later 1980s, when `ethics' had

become a major subject at a number of leading business schools.

Peter Bennett - 16 -  suggests development in this vein:

A  'societal marketing orientation ' adds an additional

consideration to the marketing concept: the impact of a firm's

activities on society.

Yet another approach defines it in terms of the `functions' that

marketing incorporates. Thus, for example, Lewis and

Erickson - 17 -  illustrate this view by means of a diagram

(figure 1.2).

 'The key element of all marketing is that, unlike almost all

other business activities, it is outward-looking; it is firmly

centred on the customer '. This is sometimes described as the

`outside-in' view. It is described particularly well in these

terms by Gareth Morgan, - 18 -  who requires that the managers

involved should adopt the perspective of looking (with the

customer'3 eye-view) from the outside, inwards towards the

organization itself. We shall see that these concepts -ay be

applied to almost all types of organization; even those non-

profit-making organizations which have traditionally viewed

themselves as apart from normal commercial processes. The needs

and wants of the `customer' (/r `client') should almost always be

paramount: the difference -- and the difficulty -- for such

organizations, is deciding who their customers (or clients) are,

and what are their needs and wants.

Peter Drucker - 19 -  stated the position even more

comprehensively:

Every business can be defined as serving either customers or

markets or end users.

Finally, Michael Baker - 20 -  points out one frequent source of

confusion, when he states that `marketing is both a philosophy of

business and a business function ... a state of mind concerning

the optimum approach to business, and the activities whereby such

ideas are translated into practice ...'. We have, indeed, seen

examples of both in the preceding definitions. He also widens

coverage of the activities (though not the view-point) even

further - 21 -  when he suggests that `real marketing has four

essential features', which he lists as:

1. Start with the customer.

2. A long-run perspective.

3. Full use of all the company's resources.

4. Innovation.

To simplify matters, I believe the best practical metaphor for

marketing is a  'dialogue ': this is a metaphor I shall

develop throughout the book. Like any sales professional who is

actually in face-to-face contact with his or her customer, the

marketer must communicate the sales points that need to be made,

even though it must often be by indirect means such as

advertising. More important, though, like any good sales

professional, the marketer should spend most of the time

 'listening ' -- in this case probably through marketing

research: the marketer who listens to his or her customers (and,

indeed, understands their viewpoint) is the most effective

manager. If you have any doubt, therefore, as to what might be

good marketing, simply think of it in the context of this

dialogue: would it work face-to-face with the customer?

This is undoubtedly a gross simplification. Even so, it

represents a basic concept which encapsulates much of what

marketing is about -- whereas more detailed explanations often

obscure the underlying truth.

On the other hand, one thing that this simple definition, in

common with the other definitions above, fails to emphasize is

the long-term aspect of marketing: that of building enduring

relationships (or even partnerships) with customers.

Christian Gronroos - 22 -  however, summarizes recent

European developments in his definition:

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.

AUDIT 1.2

Does your own organization subscribe to any of these views? If

not, how would you describe its views? What are the implications

of its views for its marketing activities? What do you think its

view  'should ' be?

With its recognition of the long timescales and the involvement

of both sides in the process, this offers -- I believe -- a

richer starting point for future developments.

RELATIONSHIP

Indeed, successful marketing practice demands this quite specific attitude of mind; but even then it is useful to distinguish two separate levels of approach. Thus, marketing can be seen as simultaneously a relationship with the customer, based upon a series of transactions which - over time - should result in mutual benefit, and a parallel dialogue between you and the customer(s), which communicates the information necessary to define that 'relationship'.

These general processes may become clearer if I describe the special situation of a salesperson (in a shoe shop, say) making a sale of one product as a result of one face to face contact - the supposedly classical sales situation. Here the 'relationship' is abbreviated to a single transaction, where the product (a pair of shoes) is exchanged for a sum of money, and there are no more elements to that relationship. Accompanying this is the 'dialogue', which in this special case is the conversation between salesperson and customer that builds up to that transaction (the sale/purchase of the pair of shoes). Typically, much of this dialogue is devoted to finding out what the customer needs and wants (what size, what colour, what style etc) rather then being devoted to persuasion as might traditionally be expected.

DIALOGUE

In a more general description, this dialogue is more complex. More individuals, especially others who may influence the decision to purchase, may enter the process and other media (letters and proposals, or the mass media, such as advertising) may be used. Still, the principle of the two-way dialogue (exploring what the customer wants, even if this is by marketing research rather than face to face) is much the same.

Similarly, the single transaction, in evolving to the more general 'relationship', becomes more complex in two directions. In the first, the elements within it become more diverse. There will be a number of separate transactions involved, not just one. Some of these may be obviously 'physical' in nature; the archetypal product sale. Others, though, may revolve around intangible exchanges, including - most intangibly of all - the corporate/brand image which is needed to reassure the customer. One way in which the description presented in this book departs from most others is that it expects some of these other transactions to flow from the customer, who will not just pay money for the goods - which is traditionally all that is expected of him or her - but will also commit a range of other elements; such as the time and effort involved in buying the product and using it (and perhaps learning to use it), possibly even the purchase of related items to enable the product to be used (or to be used more effectively), a commitment to the supplier (loyalty) etc.

The second aspect is that of time. The traditional single transaction takes no more than the few minutes that the brief dialogue lasts. In the more general model the more complex relationship, extending over multiple transaction3, similarly extends over time; and also develops over time. At the most basic level this recognises that in most markets the customers place repeat purchases with the same supplier; in which process customer loyalty is a major factor. The essence of this on-going relationship is, however, more than this. It is the investment made by both sides - such that the 'natural state' of the relationship is continuity. It is only in the exceptional condition, when the relationship breaks down, that it briefly 2eturns to the traditional single transaction mode.

 Surprisingly, in view of its importance to both sides, this relationship over time - and the mutual 'investments' associated with maintaining and developing it - is little debated in conventional marketing theory!

These two elements, 'dialogue' and 'relationship', are external elements. Thus, while they may be defined in an unconventional way, they will be quite recognisable to the most traditionally minded marketer - since they clearly represent marketing links with the outside world, especially with customers. There is, however, a third leg to marketing practice which is the antithesis of traditional marketing - since it is totally internally oriented. This is the cross-functional co-ordination of the organisation's operations; 

CO-ORDINATION

This third element is not considered by, and is by most definitions excluded from, conventional marketing theory. Yet it is seen by many practising managers as the most important aspect of marketing. It should be noted, though, that members of marketing departments - who it might be expected would welcome such an empire building definition - typically take a much more isolationist view! But for most managers, I repeat, it is this element which is seen as ensuring that the organisation delivers what it has promised.

These three legs combine to make up what may be defined as marketing practice. This compares with the more traditional approach, which has concentrated more mechanistically on a narrower set of discrete topics. Recently these have been most popularly defined as the 4 Ps  which generally fall within the 'dialogue' and 'relationship' sections of my own definition above, but only cover parts of these.

To differentiate the more general, three-legged, this model is called the 'marketing triad' (or TRIAD for short - not to be confused, though, with Kenichi Ohmae's 'triad' of international markets)

The three key elements of marketing are thus;

DIALOGUE - to establish what are the customer needs and to negotiate suitable solutions to these

RELATIONSHIP - investment in the effective external exchanges necessary to optimise these solutions, in practice, to the mutual benefit of both sides

CO-ORDINATION - management of internal operational resources across the whole organisation in order to deliver this relationship

Marketing and Internal Resources

As we have seen, most marketing theory emphasizes the necessity of starting with

the customer/consumer/client, and with his or her needs as the

prime focus of all marketing activity. In theory, at least, there

is excellent justification for this, as we saw in the earlier

section. In practice there may be even greater justification for

it, because most organizations are so preoccupied with their

internal problems -- and it takes a great deal of effort to shift

their attention from internal problems.

What, on the other hand, gets lost in this single-minded

concentration on the customer is the relationship with the

organization's internal resources. Much as the organization

cannot exist in isolation from its market, neither can it exist

in splendid isolation from the rest of the organization; although

that is often what marketing departments attempt. Marketing's

role is, after all, primarily to serve the  'organization ', even if its first task may then be to remind the organization

that it is also there (secondarily) to serve the customer.

Marketing has to work with those resources that are available, no

matter what the market may demand. Indeed, some of the most

spectacular failures have arisen from very strong marketing

visions, which drove their adherents to commit their

organizations beyond any reasonable exposure of their resources.

Laker Airways was immensely popular with its customers, but lost

hundreds of millions of dollars of its investors' funds. BCCI

earned the gratitude of many in the Third World, as the first

bank to take notice of their special needs, only to become the

subject of even wider opprobrium when it crashed.

Paradoxically, therefore, the starting point for the expert

marketer is, as we will see, the organization itself. The

important qualification here is the term `expert'; it requires

considerable expertise to examine these internal requirements

without being swamped by them. However, if you can justifiably

lay claim to this level of expertise, the process then becomes:

1  'Develop an understanding of what resources the organization

has at its disposal '. This requires a considerable degree of

sophistication, for the important resources are not those shown

on the balance sheet. Above all, it demands an understanding of

what the `product package' is; where this includes all the

service, and image, elements as well as the physical ones -- and

in the widest sense. IBM managed the transition from punched card

tabulators to mainframe computers because even its name embodied

the concept that its market was (International) Business Systems.

It had the necessary skills (along with the culture), but Exxon,

which tried to jump from oil to IT, had not -- and failed.

2  'Develop a suitable filter for marketing data '. This is

one of the most difficult stages. It requires that the marketer

focuses his or her attention, when looking at the outside world,

on just those aspects which are relevant to the organization's

future. It poses problems of `marketing myopia' (described in

more detail later in the book) whereby the marketer simply does

not see changes emerging because they are outside his or her

frame of reference (the `filter'). On the other hand, a tight

focus is very necessary in order for the marketer to be able to

handle the mass of data -- too much of this will simply swamp the

systems (with data overload). More importantly, a tight focus

means that every bit of input is transformed so that it is

immediately useful to the organization.

3  'Using this `filter' the marketer can move to find out about

the customer '. This is the conventional starting point for

marketing theory, which we examined in the previous section. The

difference is that the expert marketer conducts this examination

in the context of the lessons about the organization's resources

which he or she learned in the first two steps. This means that

the search for information is `informed'.

4  'Review the processes to date '. The next step, which

requires an extraordinary degree of professional detachment, is

to repeat steps 1-3; this time taking into account the lessons

learned overall. This may mean that the filter developed in stage

2 has to be modified in the light of what has since been

discovered in step 3. This iteration needs to be conducted

continuously. It is the step that marks out the really great

marketers. It required Ray Kroc to understand that the marketing

formula developed by a small hamburger restaurant in the

backwoods could be turned intk a world-wide McDonald's chain; and

Thomas Watson to recognize that a meat-scale manufacturer could

eventually become International Business Machines.

5  'Manipulate the organization's resources to achieve the

resulting marketing objectives '. Marketing theory, once more,

tends to assume that only the resources specifically made

available to the marketing department should be taken into

account. Expert marketers, on the other hand, recognize that all

the resources must be brought into play. Capturing resources

which are traditionally the prerogative of other departments is

very difficult, and often hazardous to one's career. But it can

pay massive dividends.

In this way, the key to successful, but  'expert ', marketing

is a very close relationship with the rest of the organization.

For those less expert, and that is the great majority, the

reverse is true!  'Thus, the first need for the less expert is

to distance yourself from the organization -- and that is the

posture you should adopt for the next few chapters '.

Complexity of Interaction and Timescales

Much of marketing theory assumes very simple relationships. This

makes the teaching of it easier, but does not prepare you for

real life. This is particularly true of the following four main

features.

1  'Multiple decision-makers '. In many buying situations

there is more than one person involved in the buying decision.

This is especially true of those customers in `industrial

marketing', but it can as easily apply to those in consumer goods

marketing. Even the purchase of a can of baked beans may need the

tacit agreement of the whole family; God help anyone who buys

beans, no matter how cheap, that the children do not like. Much

of marketing theory, though, assumes that the purchasing decision

is nicely isolated -- taken by the `buyer' alone.

2  'Multiple factors '. The purchase decision is often bundled

together with many other decisions. Thus, the decision on whether

to buy baked beans may depend upon whether there is any bread

available; the family simply will not countenance beans on

anything other than toast! It may depend upon what budget is

available, or on what higher priority items have already made a

claim to that budget.

3  'Interaction '. Perhaps one of the most unrealistic

assumptions is that the buyer takes the purchase decision in

isolation from the supplier. In many industrial decisions, as

well as in services, the most able purchasers -- along with the

most perceptive marketers -- now employ partnership techniques.

 'Both ' sides are actively involved in the decision-making

processes. This is best evidenced by how the Japanese

multinationals -- and especially Marks and

Spencer -- work so closely with their suppliers that it is often

difficult to know where the boundary line is.

4  'Timescales '. Almost all marketing theory, and most

marketing practice, assumes a purchase decision which stands by

itself; without any influence from previous experience. This is

usually an unduly simplistic viewpoint. Even the purchaser of the

can of baked beans has a rich history of exposure to advertising,

and personal experience. Yet watch television almost any night

and you will see some brand being promoted on a totally different

platform from that of a few months ago -- the marketers having

made the, usually incorrect, assumption that there is no

historical effect.

The Structures of Marketing Theory

The previous section defined marketing in global terms. It should

not be assumed, however, that there is one vast homogeneous mass

of marketing activity, any one bit of which can be interchanged

with any other. In practice, there are many differences between

the various approaches, and the activities involved, across a

wide range of organizations. Indeed, as we saw earlier, the essence of marketing is the specific nature of many of the practical 'rules' which need to be applied to equally specific situations.

On the other hand, one of the first things you should come to

appreciate about a genuine, practical marketing approach to

problems is that it abhors `pigeon-holing' any situation neatly

into categories. Rather, it prefers to look at the customers'

 'specific ' needs and wants. You will, however, also find

that such `pigeon-holing' is one of the first things that most

marketing theory actually adopts!

Frameworks are often a valuable aid to organizing ideas. Much of

the structure of marketing theory is organized as ` 'trees ''.

Each level is subdivided into a number of sub-levels, and these

in turn may be similarly subdivided. To help understand the

complexity of these linkages it is often useful to use simple

diagrams. This is also a very useful memory aid. This book

therefore makes use of such diagrams, but you should recognize

that this is a simplification intended to illuminate the ideas

rather than to define them.

The danger only arises when this process of pigeon-holing is

over-indulged and the categories are allowed to replace the

ideas.

The parallel of the family doctor is useful here. When you tell

him or her your symptoms, he or she will usually follow a form of

tree structure as an aid to diagnosis. If you have a temperature,

with a headache, a cough, drowsiness and aching in the limbs, you

may have a bout of influenza. If the doctor checks further,

however, and finds that you also have a slow pulse and a rash on

the upper abdomen you might have typhoid. One moral from this

analogy is that the doctor, who has spent a number of years

learning how to use these `trees', applies his or her expert

judgement to all the factors observed. The use of `trees' as a

guide to  'marketing ' diagnosis can be just as valuable; but

the whole picture must always be kept in mind.

Organizational Pigeon-holes

In this current context, the pigeon-holes, the categories of

`marketing organization', can be derived frkm a number of bases;

some of which are meaningful in more general terms. In this way,

a multidimensional matrix can be built to suit almost any aspect

of marketing that you are investigating.

The main dimensions, which have the widest application across the

breadth of marketing activities, are as follows.

Product or Service

The basic dimension is often thought to relate to the `product'

itself. Is it a tangible product, such as a refrigerator, which

is manufactured in a factory by the supplier? Is it an intangible

service, such as a hairdresser, where the customer has no

tangible product to take away in a carrier bag?

In practice, as we shall see later, there are difficulties in

allocating organizations even on this apparently simple

dimension. Some products, such as personal computers, have a

great deal of `service' attached to them; the total `package' of

these sometimes being described as the `extended product'. On the

other hand, there are services (even the hairdresser mentioned

above) which are dependent upon physical products; the hair-care

treatments used are very important, and are clearly physical.

There are differences in the way in which organizations might

market a  'product ', which will often be promoted on the

basis of its physical features, as against a  'service ',

where promotion may be more associated with the quality of the

organization providing it.

In general, however, we shall come to see that the basics of

marketing are shared by both sorts of organization (although some

of the names used to describe the activities are confusingly

different).

Product categories

Even within this overall categorization, marketers often presume

that there are significant differences between the various

product types. In the general category of consumer goods, for

example, there may be:

FMCG (Fast Moving Consumer Goods), sometimes called

`consumables'. These are the archetypal `marketed' goods (that

is, those goods heavily advertised to build awareness, trial and

preference) such as groceries.

Durables, sometimes further subdivided into `white goods'

(refrigerators and cookers, for example) and `brown goods' (such

as furniture, as well as electrical/electronic devices). As the

`capital' goods of the personal sector, these require more

personal selling and support.

Individual consumer or corporate customer

Just as fundamental a split is that between sales made to

individuals --the archetypal consumer in the television

commercials --or to organizations. The latter case is often

described as  'industrial sales ' or  'business-to-business

selling '. Once again, there may be significant differences in

approach.

Individual consumers who buy the product for themselves or their

families will typically spend less, but each individual will be

the sole decision-maker. Their suppliers, the mass-consumer goods

companies, will largely have to deal with such consumers by

indirect means. This requires that the suppliers listen to the

consumers, finding out about their needs as averages and in

groups, by market research, and talking to them via

advertisements in the mass media.

Industrial sales, however, will often be made by a face-to-face

sales call, which can be afforded where the value of the

individual sale is higher. The call will be made on someone who

merely represents the buying organization and may not even be the

only decision-maker. It is the nature (and extended length) of

these negotiations, and the technical demands on the sales

professionals involved, which frequently offer the most

characteristic difference from consumer goods marketing.

On the other hand, as Leslie Rodger - 23 -  says:

There is no difference in principle between industrial and

consumer products marketing. The difference is rather one of

emphasis in the way in which the elements of the marketing mix

are blended together to meet the particular needs of customers

who may be a few specialized purchasers or a mass of consumers.

The basic distinction lies in the purpose for which the goods are

bought, i.e. goods bought for organizational purposes rather than

for personal or family consumption.

Profit or non-profit

One of the divisions which causes the most soul-searching is that

between profit-making organizations and non-profit-making sectors

such as the National Health Service or voluntary organizations.

The former are easy to deal with. They are, at least in theory,

driven by the sole motive of making a profit; and good marketing

is an excellent way of increasing the bottom-line (profit)

figures.

On the other hand, employees of the non-profit sectors frequently

have difficulty in seeing how marketing (which is too often

associated in the public mind with hardselling advertisements for

fast-moving consumer goods, such as baked beans) is appropriate

to their own organization. Exactly how it may be of use will

become more obvious as we progress, but at this stage it is

necessary to point out that  'all ' organizations necessarily

have links with the outside world; such links are the stuff of

marketing. The government department which wishes to influence

motorists not to drink and drive will use market research to

discover the motivations of those who do, and the most effective

means of influencing them. It then uses the mass media to convey

those messages --in the process often becoming one of the

largest advertisers. But even the smallest charity has to decide

who its clients are, and what are their needs, before

communicating with them.

Kotler and Andreasen - 24 -  summarize the position as follows:

Although nonprofit organizations seek to influence exchanges of

money for goods and services just like for-profit organizations,

what makes them unique is their concentration on exchanges

involving non-monetary costs on the one hand and social and

psychological perspectives and modified techniques.