04Feb
Hello! In this article we will tell you about marketing in simple terms - what it is, why and how to apply it in the enterprise.
Today you will learn:
There are at least about 500 definitions of marketing. Often, with such an abundance of definitions of this concept, it is difficult to understand what is related to marketing.
Explaining in accessible language, marketing Is the activity of an organization aimed at making a profit by satisfying the needs of customers.
In a broad sense, many marketers view marketing as a business philosophy, that is, the ability to study the market, the pricing system, predict and guess the preferences of customers, effectively communicate with them in order to satisfy the needs of consumers and, accordingly, make a profit for their enterprise.
Based on the definition, it is logical that the purpose of marketing in the enterprise is customer satisfaction.
And the famous theorist economist Peter Drucker notes that the main goal of marketing is to get to know the client so that the product or service can sell itself.
To achieve the goal of the organization, marketing activities involve the solution of the following tasks:
When solving marketing problems, you must be guided by the following principles:
Marketing has a number of functions:
Analytical function involves the study of external and internal factors affecting the organization, the study of consumer tastes and the range of goods. It should be noted that it is necessary to analyze the internal environment of the organization in order to control the competitiveness in the market.
Production function includes the development and mastering of new technologies, the organization of the production of goods and services, the organization of the procurement of material and technical resources necessary for the enterprise. In addition, the production function is understood as the management of the quality and competitiveness of the finished product or service, that is, compliance with the quality of the product in accordance with established standards.
Control and monitoring function provides the process of planning and forecasting at the enterprise, the organization of the communication system, information support and risk management.
Sales function includes the pricing and product policy of the organization, provides a system of product distribution and the expansion of demand.
Innovative function in marketing, plays the role of developing and creating a new product or service.
To solve problems and achieve the set goals in marketing activities, it is necessary to apply the following marketing methods:
Thus, based on the definition, goals, objectives, functions and methods of marketing, we can conclude that the science of marketing is focused exclusively on the consumer and the satisfaction of his needs.
Depends on demand distinguish between the types of marketing presented in table 1.
Table 1. Types of marketing depending on demand
|
Marketing type |
State of demand | Task |
How to solve the problem |
|
Demarketing |
High | Reduce demand |
1. Raise the price |
|
Conversion Marketing |
Negative | Create demand |
1. Development of a plan for the promotion of a product or service 2. Re-release of goods 3. Decrease in cost |
|
Incentive Marketing |
Absent | Stimulate demand |
The reasons for the lack of demand must be considered |
|
Development marketing |
Potential | Make potential demand real |
1. Determine the needs of buyers 2. Create a new product or service that meets these needs |
|
Remarketing |
Decreases | Restore demand |
Find ways to revive demand |
|
Synchromarketing |
Hesitates | Stimulate demand |
1. Adjust the price (lower if necessary) 2. Promotion of a product or service |
|
Supportive marketing |
Corresponds to the proposal | Stimulate demand |
Correctly conduct a pricing policy, stimulate sales, conduct advertising, control costs |
|
Counter-marketing |
Irrational | Reduce demand to zero |
Stop release of goods |
A striking example is the use of demarketing in the cold season, when the need for electricity increases significantly. Since this can negatively affect the entire grid system, very expensive equipment can fail, marketing workers develop programs to reduce demand or reorient it.
There may be no demand for products if:
To interest the buyer and increase demand, the company uses tools such as a sharp decline in the cost of a product or service, increased advertising activities, the use of trade marketing methods, etc.
Depending on the market coverage distinguish between mass (undifferentiated), concentrated (target) and differentiated marketing.
Undifferentiated Marketing Concept assumes a product intended for all market segments. There is no product differentiation, the products are sold at low prices.
With concentrated marketing the situation is reversed. Products or services are designed for a specific group of customers.
When using differentiated marketing forces are directed to several market segments. But it is worth noting that a separate offer is created for each market segment. This type of marketing is considered more promising in relation to the previous two types.
There are 2 levels of marketing in an enterprise:
Tactical, or in another way, operational marketing involves the development of short-term plans to achieve the goals of the organization.
Strategic marketing is aimed at developing long-term prospects for the enterprise in the market. That is, the internal capabilities of the organization are assessed on the impact of the external environment of the market.
Marketing strategies are classified into the following groups:
Market expansion strategy it is also called a concentrated growth strategy. That is, the company's strategy is aimed at horizontal development, conquering most of the market in the fight against competitors, improving existing products or services.
Innovation strategy otherwise defined as an integrated growth strategy. That is, the organization's activities are aimed at vertical development - the creation of new goods and services that will have no analogues.
Diversification strategy the organization chooses if the probability of "survival" in the market with a certain type of product or service is very low. Then the organization can produce a new product or service, but at the expense of existing resources.
Reduction strategy it is used when an enterprise has been on the market for a long time for more efficient work. The organization can reorganize or liquidate.
Also, marketing strategies are distinguished by market coverage:
Mass marketing strategy is aimed at the whole market as a whole. Market advantage is achieved by reducing costs.
Differentiation strategy focused on capturing most of the market segments. The advantage is achieved by improving the quality of products, creating a new design, etc.
Consumer individualization strategy is aimed at only one market segment. The advantage is achieved by the originality of the product or service for a specific target group of customers.
Marketing strategy development consists of seven stages:
Stage 1. The analysis of macroeconomic indicators, political, social and technological environment, as well as the impact of international factors is carried out.
Stage 2. To assess the capabilities of the enterprise, economic analysis, marketing analysis, production capacity assessment, portfolio assessment and SWOT analysis are carried out.
Stage 3. Includes an assessment of the organization's competitiveness. The strategies of competitors, strengths and weaknesses, methods of establishing superiority over competitors are studied.
Stage 4. In the next step, the goals of the marketing strategy are set.
Stage 5. Includes research on customer needs as well as methods and time to market.
Stage 6. Specialists receive specific recommendations for enterprise management.
Stage 7. An assessment and analysis of the economic strategy and control instruments is carried out.
Summing up a small summary, we can conclude that the marketing strategy reflects a plan to achieve the goals of the company, which assesses the production capabilities and financial budget of the organization.
The marketing plan is inextricably linked with the marketing strategy in the enterprise, that is, marketing plan implies a special document reflecting the goals and objectives of the organization's marketing, as well as marketing strategies that will be applied in practice.
To concretize the marketing plan, a marketing program is drawn up, which will indicate who does, what to do and how to do it.
To implement your marketing plan, you must adhere to the following principles:
Rolling planning principle applies depending on the market situation. This principle involves the introduction of adjustments to the current plan. For example, a marketing plan is designed for 3 years, but the market situation changes quite often, so every year you need to make amendments and adjustments to the plan in order to be competitive.
Differentiation principle assumes that the installed product or service cannot be liked by everyone. Therefore, using this principle, it is possible to reorient to service any category of consumers, selected according to certain criteria.
Principle of multivariance provides for the development of several marketing plans at the same time for all possible situations.
The structure of the marketing plan is as follows:
The mission of the organization is to identify the strengths in order to become successful in the market.
SWOT-analysis - This is a situational analysis, which reflects the strengths, weaknesses, capabilities of the organization, as well as threats under the influence of internal and external environmental factors.
It is advisable to set goals and define strategies for each area separately.
In this block, when choosing market segments, the emphasis is on reducing costs and increasing sales efficiency through sales and prices.
Here it is necessary to highlight the sales channels of products, whether they work effectively, in what quantity and how they are implemented in the organization.
At this point, it is necessary to determine the methods of selling goods or services that could be successfully used both in the short term and in the long term.
Here you need to constantly improve the after-sales service system. It is necessary to compare the level of service with competitive enterprises, to improve the qualifications of employees, to monitor their communication skills. In addition, it is worth providing certain guarantees and additional services to your customers and comparing them with your competitors.
When drawing up a marketing budget, it is necessary to take into account all the planned expenses, revenues and highlight the projected net profit of the organization.
Thus, it should be concluded that the marketing plan is simply necessary for the successful organization of the enterprise. This is a kind of map that helps to navigate the economy as a whole, to conduct an effective business and be competitive in the market, making high profits.
Marketing in business or in another way it is called marketingB2 B (business-to-business, business to business) is defined how business relations between industrial enterprises in a market where goods and services are not for final consumption, but for business purposes.
B2B marketing should not be confused with marketing B2 C(Business to Consumer, business to consumer), which implies marketing relationships in a market where goods and services are created for final consumption.
Marketing in business has distinctive features and characteristics:
Network marketing (MLM - multi level marketing) is a technology for selling products from manufacturer to consumer, which is advisory in nature and is transmitted from person to person. At the same time, the so-called distributor can not only sell the product, but also attract new sales agents to the company.
The business plan of an MLM company assumes that distributors:
The manufacturer is responsible for organizing the delivery. It ensures that the goods are delivered to the distributor at home. For the effective work of sales agents, master classes, seminars are provided to develop sales skills and achieve success in their business.
For an entrepreneur network marketing is an attractive business, as it does not require experience and a large initial investment in capital.
For the buyer network marketing also looks good, as truly responsible MLM companies provide quality products and a warranty on them. In addition, before purchasing a product, the consumer receives all the necessary information about it and receives the product at home.
Network marketing involves active and passive income. The agent receives active income for the volume of sales. And passive income is created through the creation and active development of a subnet of distributors.
Nevertheless, even at first glance, network marketing is seen as an attractive business, in addition to advantages, it also has a number of disadvantages.
Table 2. Advantages and disadvantages of network marketing
To attract a potential distributor to the MLM business, you can use the following methods:
When it comes to network marketing, then immediately there is an association with such a definition as a financial pyramid, whose activities are prohibited on the territory of the Russian Federation.
The main difference between network marketing and pyramid schemes is that the profits received by MLM companies are divided between distributors, taking into account the contribution of each. And the financial pyramid receives income from the number of attracted people and their contribution to a non-existent product.
In addition, network marketing can be distinguished from a pyramid scheme by the presence of:
The pyramid scheme does not have a specific marketing plan, it is very confusing and incomprehensible. The management of the company is anonymous, and even more so there is no charter of the enterprise. There is no assortment of goods, there are only a couple of units of questionable products. Also, there is no training system or it costs a certain amount of money, for which cheap advertising brochures are issued.
In network marketing, training of sales agents is provided on a free basis, or training disks, books or videos on the Internet are issued for a symbolic amount.
Striking examples of the successful development of network marketing are Amway, Avon, Oriflame, Faberlik and Mary Kay.
Summing up a small summary, we can conclude that network marketing is aimed at promoting the product and rewarding the distributor for the work done, and the main goal of the financial pyramid is to attract people and their monetary investments.
Internet marketing is currently a relevant innovation for the promotion of goods and services.
Internet Marketing is an application of traditional marketing activities on the Internet.
The purpose of internet marketing- making a profit by increasing the number of visitors to the site or blog, who in the future will become buyers of certain goods and services.
The tools for increasing the sales of goods and services and increasing the number of website traffic are:
Helps to create and strengthen relationships with a specific target group that subscribes to the newsletter.
Internet marketers face the following challenges:
Online marketing includes the following elements: product, price, promotion, place.
Internet marketing involves strategies such as:
Viral marketing is the most challenging yet most rewarding online marketing strategy. It is focused on creating such interesting information that everyone will view hundreds of times, constantly like and repost.
Viral attraction of people is applied with the help of:
Effective performance and success can be achieved by combining viral social media marketing with advertising.
The main virtues of viral internet marketing are the simplicity and speed of action. In addition, viral internet marketing is cost effective as it does not require a lot of investment. Advertising law does not apply to viral ads. That is, there is no censorship, no restrictions, which makes internet marketing more free.
Essential the downside of viral online marketing there is insufficient control over the process, and the supplied material may be distorted.
Comprehensive internet marketing implies a set of all kinds of resources and advertising channels for promoting a product or service to the market.
The structure of integrated internet marketing is as follows:
Under PR (PR) means increasing brand awareness. This strategy should be used by all companies, regardless of the position, as it helps to increase the company's revenues, attract potential customers, and the brand becomes recognizable and popular on the Internet.
Having considered the goals, tools and strategies of Internet marketing, we can highlight its advantages:
In conclusion, I would like to say that marketing is a very interesting science for entrepreneurs. Knowing how a marketing plan is drawn up, when and where to apply this or that marketing strategy, you can remain competitive in the market for a long time, while receiving good profits. And by mastering internet marketing, you can achieve even greater success in.
Boris Klyuchkovsky
You can make mistakes
but mistakes cannot be built.
SINCE THE 1980s, there is talk of a serious crisis in "academic" (theoretical) marketing; about the misunderstanding by business schools of the essence and objectives of practical marketing; that practitioners don't read articles in academic marketing journals.
Why did academic marketing go the wrong way, start building mistakes, and essentially turn into pseudo-marketing?
The main reason for this should be recognized as a serious economic imbalance, which gradually formed in academic marketing.
It all started with the opening of marketing departments in American universities in the 1960s and 1970s. The first teachers were theoretical economists. Many of them immediately began to turn marketing into a section or variant of the economics they were used to. The greatest "success" in this thankless task was achieved by the economist Kotler. (See "Kotler and Kotleroids").
Completely failing to understand the philosophy and spirit of marketing, and most importantly, the role of marketing in business, Kotler considered it his task to “explain how the market actually works, giving a vital texture to the theories of economists (!?) ". In one article about Kotler we read: "The first edition (1967) was undoubtedly the work of an economist with a touch of behaviorism." Marketing teachers liked his "bricks": they did not require them to be able to think and create. They soon became the standard for many marketing departments around the world. And off we go.
Is it any wonder that ten years later, in 1976, marketing historian Robert Bartels would write: "The early students of marketing actually studied like economists."
But if in the West the best teachers, under the pressure of criticism from businessmen, are already beginning to realize the harmfulness of cotleroid marketing and change training programs, then it seems that we will have to carry it out for a very long time.
The main reason for this is that Russia entered the market economy without marketers, but with an army of economists, both theoreticians (teachers of political economy) and practitioners (inhabitants of economic planning departments). Both those and others were very far from marketing. Nevertheless, yesterday's professors of Bolshevik political economy quickly spawned dozens of marketing departments.
These "Bolsheviks", who, of course, did not work a single day in real business, in a few days ran through the "marketing" texts written by Western economists who also did not work a day in business. Their textbooks give an idea of what kind of "marketers" they train for Russian business. (See, for example, T.A. Gaidaenko and I.V. Lipsits.
The dominance of economists is also felt in our marketing organizations, such as the Russian Marketing Association and the Guild of Marketers. Worthy of attention is the definition of marketing proposed by the President of the Guild, economist Igor Berezin: “Marketing is the study of markets and the impact on them in order to facilitate the solution of problems facing economic entities.” This has a very, very relative relation to the tasks of real marketing.
After completing my degree in economics, I started working in practical economics. It soon became clear that I didn’t need much of my university baggage. Sales in the company were not shaky or fast, and I was "thrown" into marketing and advertising. Since from the marketing course only some "cash cows" and 4p were stuck in my head, I had to sit down again for marketing Talmuds. Attempts to somehow adapt this "knowledge" to my tasks have yielded nothing.
With advertising, I also did not work out. I read several Russian books on advertising - it didn't help. I happened to be at the seminar of A.P. Repyev. What I heard, and especially the practical help in creating "layouts", impressed me so much that I took a distance course at the A. Repyev School.
Here I came across a different marketing, with a different advertisement, with a different thinking (thinking "from the client") and with other books. These were books by Peter Drucker, Theodore Levitt, Claude Hopkins, David Ogilvy, Jay Abraham, Tom Peters. Applying the approaches tried and tested by generations in practical marketing has proven to be productive and interesting, although not very easy.
Probably, I demonstrated some ability, because I received an invitation from Repyev to his company Mekka Consulting. And for several years now I have been actively engaged in real marketing projects, comprehending more and more subtle aspects of marketing and advertising "under auspicious guidance."
Our clients are businesses of very different profiles, so life itself has provided me with an excellent opportunity to repeatedly test the productivity of customer-oriented marketing.
In client firms, I often run into certified marketers. As a rule, they do not understand at all the differences in philosophy and tasks of economics and marketing and do not really understand what they should be doing. This makes them useless and sometimes even harmful employees.
Since it was not easy for me to understand the above, I decided that my experience (while it is still fresh in my memory) could be useful to someone. Especially to those economists who find themselves in marketing.
First, let's define in terms. In the Russian language, the word economy is simultaneously understood as the national economy of the country and the science that studies the laws of this economy. Earlier, economic science was called political economy, and now, in the Western way, economics. In business, economics is usually understood as the calculation of expenses and income, efficiency, depreciation, etc.
Marketing also means different things: an "academic" discipline called "marketing" (economic marketing) and a craft that helps to solve practical problems, based on the understanding of the Client (client marketing). These two marketers have little in common.
If we compare the content of thick books on economics with the content of thick books on "academic" marketing, there will be few differences: almost the same schemes, almost the same terms, almost the same style. And here and there the same concepts and tools flash by (for example, SWOT, Porter's competitive forces, a series of matrices, etc.). And here and there a sea of unnecessary definitions and classifications. There is a dangerous oversimplification in both. There is a lack of evidence and examples of effective use in both cases.
The reason for this similarity is that, as we already know, the authors of most of the marketing "bricks" were and are economists, starting with Kotler, or their students - economics marketers.
By the way, would you like to compare the definitions of economics and academic marketing. Guess which refers to what:
"X is a system of views, a function of coordinating various aspects of commercial activity, a complex of interrelated elements of business activity, a business philosophy, the purpose of which is to mitigate crises of overproduction, and finally, the process of balancing supply and demand."
"X is an integrated system for organizing production and sales of products, built on the basis of a preliminary study of consumer demand."
"X explores the problem of efficient use of limited production resources or their management in order to maximize the satisfaction of human material needs."
"X is the process of planning and implementing concepts of pricing, promotion and distribution of ideas, goods and services, aimed at the implementation of exchanges that satisfy both individual and organizational goals."
Another sad similarity between economics and academic marketing is their complete uselessness for practice, for real business, for making a profit.
When I read "scholarly" works of specialists in economics and academic marketing, a ditty comes to my mind: "We do not sow or plow, but play the fool. From the bell tower something wave, disperse the clouds. " One successful businessman, Doctor of Economics, summarized his rich experience in this way - the whole economy is reduced to one formula: profit = income - expenses. It became a little offensive "for the aimlessly spent years" in a respectable university.
Economists K. McConnell and S. Brue admit: "Economics is predominantly academic, not narrowly professional ... It is not the science of business management and does not reveal the secrets of how to make millions."
Marketing academic Stephen Brown is even more outspoken: "How many of us would want managers to follow our pseudo-suggestions, especially if we were responsible for the failure?" By the way, irresponsibility to practice is inherent in both economics and academic marketing.
It is significant that many jokes about economists and academic marketers are similar - they use the words “economist” and “marketer” interchangeably. >>
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Economics is a very confusing way of explaining simple things. The only function of economic forecasting is to make astrology look more respectable. Bernard Shaw: "Even if economists are tasked with completing at least one case, they will never come to an agreement." Place 50 economists in a room and you get 50 opinions, all of which are wrong. Economists have predicted nine of the last five economic downturns. The first law of economists: D.J. Peter: "Economists are the ones who can explain tomorrow why their forecast yesterday did not come true today." Teach your parrot to pronounce the words "demand" and "supply" - and you have a ready-made economist. Christopher Columbus was the first economist: crossing the Atlantic, he did not know where he was going; Having reached the coast, he did not know where he was, and all this was done with a government grant. Economists answer a question not because they know the answer, but because they are asked. |
Both economics and academic marketing do not contain any scientific knowledge, that is, fundamental provisions that allow predicting something, as is the case, for example, in physics. This is where the disagreements in the predictions of economists are connected.
However, in economics at every step you will come across concepts such as "laws", "principles" and "theories." All these terms essentially mean the same thing, namely, a generalization or statement of patterns in the economic behavior of individuals and institutions. Talking about "economic laws" is confusing because the word "law" implies a high degree of precision, universality of application, and even moral justice - but there is nothing like that in economics.
Marketing deals with real people, so it is even more dangerous to look for some kind of dogma and laws in it, although Trout and Rice allegedly found whole 22 laws of marketing and called them immutable. Conclusions in marketing must be done even more carefully than in economics. The areas of their fairness should be discussed even more carefully. It is not a fact that the conclusions made by someone and once, even fair at that time, will be fair at this time and in this situation. Therefore, before building your marketing plans on the "generalizations" from the textbook, you should carefully analyze and test everything. The unscientific nature of marketing is indirectly confirmed by the “scientist” F. Kotler: “It takes a day to learn marketing; it takes all your life to master it. " You can't learn a single science in a day.
In economics and marketing, nobody proves anything. When Kotler is accused of being unsubstantiated, our 'guru' makes an amusing argument: “I remember the words of [economist] Paul Samuelson, my mentor:“ Developing theories is already a very difficult task in itself, to waste time on proofs. This work can be done by others. ” But the "others" are also not eager to prove anything.
In other words, the content of texts on economics and academic marketing is simply the fruit of the unbridled imagination of their authors.
Among the many negative effects of economics on marketing, two should be highlighted.
First of all, it is the abuse of mathematics. Vasily Leontiev (Nobel laureate in economics), himself a qualified mathematician, constantly criticized attempts to apply mathematical theories to explain world economic problems. In his opinion, economics is an applied field, and its theories can be useful only if it is proved that they work in practice.
One economist even claims that this abuse caused rigor mortis ( rigor mortis) economics. Economics marketers have been successful in numbing marketing.
In a market economy, the role of marketing is to organize free and competitive exchange and effective communication between the seller and the buyer to ensure that the supply of goods and services and the demand for them coincide.
Exchange is the physical flow of goods between a producer and a consumer.
Communication is the flow of information before, during and after the exchange, aimed at effectively aligning supply and demand.
The distribution process is responsible for organizing the exchange of goods and services, the task of which is to transfer products from the state of production 9 to the state of consumption. This "flow" of production into the state of consumption creates three types of benefits: the benefit of the state, the benefit of space, and the benefit of time. The creation of the benefit of the state means the totality of all material transformations of the transfer of the goods to the usable state (fragmentation, packaging, sorting, etc.). Place benefit creation involves spatial transformations (transportation, geographic distribution, etc.) that place the product at the disposal of users at the point of use, transformation or consumption. Creation of the benefit of time means temporary transformations (mainly storage), thanks to which goods become available to users at the time they need. It is thanks to these functions that the manufactured goods fall into the “field of vision” of target consumers, which creates favorable conditions for the coincidence of supply and demand. An exchange can only take place if potential buyers are informed about the existence of goods and (or) about their properties. The development of knowledge of manufacturers, distributors and buyers is provided by marketing communications.
In a typical market, seven communication flows can be distinguished (Fig. 1). Before investing money, the manufacturer collects information to determine the needs and desires of the buyers, which constitute the opportunity that is beneficial for him, the manufacturer. Likewise, a potential buyer conducts research on supplier offers. After the start of production, the manufacturer starts the communication program.
The "immaculate circle" of economic development
Marketing initiates a "blameless" circle of economic development (Figure 1.2). This development process includes the following stages:
need strategic competitive market
Rice. 1.
Rice. 2.
Marketing contributes to the development of democracy in business because it:
Edition: Market-Oriented Management
Marketing is both a business philosophy and an action-oriented process. The first chapter is devoted to the description approach- explaining the ideological foundations of marketing and their impact on the activities and organization of the company. Marketing like active process performs a number of tasks necessary for the normal functioning of a market economy. Another purpose of this chapter is to characterize these challenges, the importance and complexity of which change as technology, economics, competitiveness and the international environment evolve. Restricting ourselves to this framework, we will consider the impact of the above environmental changes on the management of the firm and, in particular, on the marketing function.
After reading this chapter, you will gain an understanding of:
The term "marketing" - now used not only in English, but also in many other languages - is extremely "loaded", ambiguous and often misunderstood, and this applies not only to opponents of marketing, but also to its supporters. Most often, this term is used in three meanings.
This understanding of the role of marketing implies that marketing and advertising are omnipotent, that with appropriate communication methods, you can make the market accept anything. Such methods of imposing goods and services are developed and applied regardless of whether the firm seeks to meet the real needs of customers. The main focus is on the needs of the seller, that is, on the conclusion of the transaction.
The myth of the omnipotence of marketing is quite persistent, and despite the fact that it has enough refutations in abundance. For example, the fact that a large proportion (over 50%) of new products and brands fail suggests that markets have the ability to resist the supposed overwhelming force of marketing.
The principle of consumer sovereignty
Despite the prevalence of the misconception described above, marketing is based on a completely different theory, or ideology. In fact, the philosophy that underlies marketing - it can be called the concept of marketing - is based on theory of individual choice and its practical implementation in the form the principle of consumer sovereignty. From this point of view, marketing is nothing more than a social manifestation of principles that at the end of the XVIII century. were promoted by classical economists and which later became the operating rules of management. These principles, formulated by A. Smith, form the basis of a market economy and in a condensed form can be formulated as follows:
The welfare of society is the result not so much of altruistic behavior as the coincidence of the selfish interests of buyers and sellers, which is expressed in voluntary and competitive exchange.
Proceeding from the fact that the pursuit of personal interests is inherent in most people - no matter how sad it is from a moral point of view, but the fact remains - A. Smith proposed to accept people as they are, but at the same time to develop a system in which egocentric individuals Would "work" for the good of society, and not only for their own good. This is the system of voluntary and competitive exchange, governed by invisible hand or selfish pursuit of personal interests, ultimately in line with the interests of society as a whole.
In modern economics, this basic principle is applied in a slightly modified form: it takes into account social (solidarity) and public (externalities, public goods, government regulation) aspects. And yet it remains the main principle to which the economic activity of a successful firm operating in a free competition is subordinated. Moreover, today we can say with confidence that the countries that rejected the ideas of A. Smith are currently in a less favorable economic position. A clear confirmation of this are the perturbations in Eastern Europe and the active transition of new and backward countries to a market economic system (through deregulation and privatization).
In our opinion, the market economy is based on four basic principles. At first glance, these provisions are simple, but their consequences in terms of a philosophical approach to the market are truly enormous:
Marketing areas
Marketing is based on these four principles. This gives rise to a philosophy of action that is valid in any organization serving the needs of any customer group. The entire field of marketing can be divided into three areas:
This is the ideology of marketing. As you might guess, there is a big difference between what marketing should be and what it really is. You don't have to go far for examples. Nevertheless, a successful firm must strive for perfect marketing. Ideal marketing may be a myth, but it is driving myth, which should be constantly guided by firms in their activities.
The two sides of marketing
The application of the above philosophy of action by a firm in practice involves two approaches:
Marketing is a social process aimed at meeting the needs and desires of individuals and organizations by creating a free competitive exchange of goods and services that create value for the buyer.
This definition combines three fundamental concepts: need, commodity and exchange. Concept needs requires consideration of the motivation and behavior of consumers, individuals or organizations; concept goods or the service involves the manufacturer's response to market expectations; exchange refers us to the market and the mechanisms that ensure the interaction of supply and demand.
By itself, the term "marketing", literally meaning the process of providing something to the market, does not reflect the dualism inherent in this process, in other words, the term emphasizes not so much the "analytical" as the "active" side of this process. (As a lyrical digression, we note that in order to avoid confusion, the French Academy proposed to use the terms la mercatique and le marcheage- specifically to highlight these two aspects of marketing. In practice, however, these terms are rarely used in French business circles.) For this reason, the terms “strategic” and “operational” marketing are used.
Operational Marketing
Operational marketing is action-oriented process, carried out over a short or medium term and aimed at existing markets or segments. In essence, this is the classic commercial process of achieving target market share by using tactical means, related to product, distribution (place), price and communication (promotion) - the four Ps of the marketing mix, as they are often called in professional jargon. The operational marketing plan contains goals, position descriptions, tactics and budgets for each brand in the company for a given time period in a given geographic region.
The economic role of marketing in the activities of the firm is shown in Fig. 1.2. It shows how the four main management functions are interconnected: research and development, manufacturing, marketing and finance.
The main task of operational marketing is to obtain revenue from sales, or target turnover. This means that the firm must “sell” and find purchase orders using the most efficient sales methods while minimizing costs. From the point of view of the production department, the goal of achieving a certain volume of sales is "translated" into the corresponding production program, from the point of view of the sales department - into the program of storage and physical distribution of products. Thus, operational marketing is the determining factor on which the profitability of the company in the short term directly depends.
The level of vigor of operational marketing is a decisive factor for a firm, especially when it comes to fiercely competitive markets. Any product, even the best one, should be sold at a price acceptable to the market, be available at points of sale that are convenient and familiar to target consumers, and be supported by various media promoting the product and highlighting its distinctive qualities. Situations where demand exceeds supply, or when the firm is well known to potential users, or when there are no competitors, are rare.
There are many examples of promising products that were never seen on the market due to lack of commercial support. First of all, this applies to firms where the "engineering" spirit prevails, that is, it is believed that a quality product will definitely be recognized, and the company does not want to adapt it in accordance with the needs of buyers:
This attitude is especially characteristic of Latin culture. Mercury is the patron saint of trade, as well as thieves, so Christ expelled the merchants from the temple; as a result, selling and advertising are still considered shameful pursuits.
Operational marketing is the most prominent, most visible aspect of marketing, primarily because of the importance of advertising and sales promotion. Some organizations, for example banks, "came" to marketing precisely through advertising. Other firms - many manufacturers of industrial goods - on the contrary, for a long time refused to believe that marketing had a place in their business, thereby implicitly associating marketing with advertising.
Thus, operational marketing is commercial tool firm, without which even the best plan will not lead to satisfactory results. It is undeniable, however, that profitable operational marketing is impossible without a robust, well-thought-out strategy. Dynamism without thought is just an unnecessary risk, nothing more. As correct as the operational marketing plan is, it will not create demand if there is no need, nor will it be able to support activities that are doomed to disappear. Consequently, operational marketing can be profitable if it is based on a strategy, which, in turn, is based on the needs of the market and their possible development.
Strategic marketing
Strategic marketing is primarily about analysis needs individuals and organizations. From a marketing point of view, the buyer does not need the product as such, he needs solution, which can be provided by this or that product or service. This solution can be obtained using various technologies, which themselves are constantly changing. The role of strategic marketing is to evolve in parallel with the underlying market and identify the various product markets or segments, existing or potential, by analyzing the entire variety of needs to be satisfied.
The identified product markets represent various economic opportunities, advantage which need to be assessed. A quantitative assessment of this advantage is the value potential market, dynamic assessment - an economically profitable period for him, or the duration of his life cycle. The advantage of the product market for a firm depends on its own competitiveness, in other words, the ability of the firm to meet the needs of consumers better than its competitors. A firm is competitive if it has competitive advantage: either it can distinguish itself from the competition due to its stable distinctive qualities, or it has higher productivity and, as a result, lower costs.
In fig. 1.2 shows the relationship of various stages of strategic marketing with other basic functions of the firm. Regardless of whether attracts whether the goods the market or pushed by the company(or technological advances), it must pass the "test" by strategic marketing for economic and financial viability. In this respect, the interaction between R&D, production and strategic marketing is crucial. The decisions on the volume of production capacities and the amount of investments fully depend on the product market chosen as a result of such confrontational interaction. Consequently, the stability of the overall financial structure of the firm is at stake.
From this we can conclude that the role of strategic marketing is: (a) using existing opportunities or (b) creating attractive opportunities, that is, opportunities that correspond to the resources and know-how of the firm and promise growth potential and profitability. The strategic marketing process has medium and long-term planning horizons, its task is to develop missions firm, setting goals, formulating a development strategy and ensuring a balanced portfolio structure. To summarize what has been said, compare the roles of operational and strategic marketing in Table. 1.2.
This task of reflection and strategic planning differs significantly from operational marketing and requires completely different skills. Nevertheless, as the table shows. 1.2, these two roles are completely complementary, indicating that the development of the strategic plan should be carried out in close connection with operational marketing. In operational marketing, the emphasis is on variables unrelated to the product (distribution, pricing, advertising and sales promotion), in strategic marketing, on the provision of a more valuable product at a competitive price. In strategic marketing, the product markets that the firm will serve are selected and ordered according to the degree of importance, and the primary demand in each of these markets is predicted. Operational marketing sets goals for achieving market share and draws up the budgets necessary to achieve them.
As shown in fig. 1.3, by comparing the target share of each product market and the corresponding forecast of primary demand, it is possible to develop sales target, first in terms of volume, and then, taking into account the pricing policy, in the form of turnover. Subtracting direct production costs, possible fixed costs for the creation of certain structures, marketing costs associated with the activities of sales personnel and allocations for advertising and sales promotion, we get expected gross profit. Its value shows how much money a firm can get from a given commodity market. The expected gross profit must exceed the overhead costs in order for the firm to make a net profit. The content and structure of the marketing plan will be discussed in detail in Ch. ten.
Response Marketing and Offer Marketing
As shown in Fig. 1.2, innovation, or new product ideas, can come from two completely different sources: the market and the firm. If the idea of a new product is born on the market and arises, for example, as a result of market research that has identified unfulfilled (or poorly met) needs or desires, innovation is called market-driven. The research results are passed on to designers and developers who are looking for ways to meet the need. The role of operational marketing in this case is to promote the proposed new solution in the target segment of consumers.
Another source of innovation, most typical for the markets of high-tech goods and goods for industrial purposes, may be a laboratory or designers who, as a result of fundamental or applied research, discover or develop a new product, a new service or a new organizational system that can more successfully meet existing or latent needs. In such a situation, the role of strategic marketing is to verify the existence of a potentially profitable market segment, to assess its size and the success factors of a new product, which in this case is called a company-driven innovation. The role of operational marketing can be more complex, since it is necessary to create a market for a product that is not in demand (at least explicitly) and is not expected by the market and which may require potential buyers to change their consumer or user habits.
Thus, within the framework of strategic marketing, two different, but complementary approaches can be distinguished: response marketing and marketing offer.
We intend not to ask consumers what products they need, but to independently offer products that the public is after. People don't know what is technically feasible and what is not, but we do. Therefore, instead of conducting large-scale market research, we focus on the product and its application. We are trying to create a market for it and for this we educate the public, we carry out communication.
It can be concluded that the goal of strategic marketing is not only (a) listening to consumers and responding to their expressed needs, but also (b) leading consumers in the direction they need, even if they have not yet realized the "destination" ... The general role of marketing in a company can be summarized as follows:
In a market economy, the role of marketing in a firm is to generate “profit” by developing and promoting “valuable solutions” to the “problems” of individuals and organizations.
The word "development" refers to strategic marketing, the word "promotion" refers to operational marketing.
In a market economy, the function of marketing is to organize free and competitive exchange to ensure effective match of supply and demand for goods and services. This coincidence does not arise by itself, but requires coordinated activities on two levels:
Organization of exchange
The distribution (distribution) process is responsible for organizing the exchange of goods and services, the task of which is to transfer products from the state of production to the state of consumption. This flow of production into consumption creates three types of benefits that add value to the distribution process.
Historically, the above distribution tasks are performed by independent intermediaries such as sales agents, wholesalers, retailers and industrial distributors - in other words, distribution sector. Some functions of the distribution process become objects of integration, for example, from the production side (direct marketing), consumption (consumer cooperatives) or distribution (supermarkets, chain stores, etc.).
Further, there are vertical marketing systems that unite independent firms that carry out different stages of the production and / or distribution process. This is done with the aim of coordinating the commercial activities of the participants, saving operating costs and, ultimately, increasing the impact on the market. Examples include voluntary networks, retail cooperatives, and franchise organizations. In many sectors of the economy, vertical marketing systems are replacing traditional overly fragmented distribution channels. They represent one of the most significant formations in the service sector, contributing to the intensification of competition between different forms of distribution and a significant increase in the productivity of distribution.
Distribution value added is distribution margin, or the difference between the price paid to the manufacturer by the first buyer and the price paid by the end user or consumer of the product. This could include the margins of one or more distributors, say the margins of wholesalers and retailers. In fact, the distribution margin is a payment to intermediaries for their functions. According to some estimates, in the consumer goods sector, the cost of exchange, which includes all activities of distributors, is about 40% of the retail price. Distribution costs make up a significant portion of the price of any product.
Organization of communication flows
The simultaneous occurrence of the various conditions necessary for the exchange to occur is still not enough for supply and demand to really coincide. An exchange can only take place if potential buyers are equally aware and informed about the existence of the goods or about an abstract combination of attributes that can satisfy their needs. Communication activities are aimed at developing the knowledge of manufacturers, distributors and buyers. As shown in fig. 1.4, there are seven communication streams in a typical market.
Marketing as a factor in business democracy
Marketing, and in particular strategic marketing, plays an important role in a market economy, not only because it ensures an effective match of supply and demand, but also because it initiates a "blameless" circle of economic development (Fig. 1.5). This development process includes the following stages:
As already emphasized, reality does not always coincide with theory. The philosophy of market orientation is increasingly being adopted and implemented in Western firms.
From the point of view of organizing communication and exchange in a market economy, it is obvious that, despite all its popularity, marketing is not a new type of human activity, since the tasks with which it is associated have always existed and have always been performed by one or another participant in a system that allows free exchange. ... Even in autarky, which is based on the most primitive form of exchange - barter, there are flows of exchange and communication, only they arise spontaneously and do not require any special resources or organization in any form.
The increasing complexity of the technological, economic and competitive environment has pushed firms to create, and then to strengthen the marketing function. In this regard, it will be interesting to trace this evolution in order to better understand the current role of marketing. In this evolution, three stages can be distinguished, each of which determines the priority marketing goals: passive marketing, operational (or transactional marketing), and strategic (or active) marketing.
Passive Marketing: Product Orientation
Passive marketing is the prevailing form of organization in the economic environment, which is characterized by the existence of a potentially important market, but limited offer: the available production capacity is insufficient to meet the market needs. The demand thus exceeds the supply. Passive marketing also assumes that needs are known and stable, and that the rate of technological innovation in the underlying market is slow.
This type of economic situation was observed, for example, at the beginning of the 20th century, during the industrial revolution, as well as immediately after the end of the Second World War. This environment continues to prevail in many developing countries, especially in Eastern Europe.
Obviously, in an undersupply environment, marketing plays a limited, passive role. Since the needs are known, strategic marketing is done "by itself", and operational marketing is reduced to organizing the flow of goods produced. Promotion is considered superfluous, since the firm is already unable to supply the market with its products in the required quantity. Contacts with the market are often limited to the "first echelon", that is, the first buyers of the goods. Most often they are intermediaries, wholesalers or industrial distributors. Contact with end users is limited and market research is rare. This situation is reflected in the organization of the company, where the production function dominates, and the main priorities are the increase in capacity and increase in productivity. Marketing in this case is necessary in order to sell what you have managed to produce.
With the "commodity concept", the structural organization of the firm as a whole has the form, as shown in fig. 1.6.
Such an approach is acceptable in a situation where demand exceeds supply, when buyers are ready to purchase any product they can find. In reality, such market conditions are rather an exception, and if they do occur, then for a short period of time. The danger of the commodity concept lies in the fact that with it the firm becomes "short-sighted" in its outlook, nothing stimulates it to proactively behave, that is, to prevent changes in the environment and prepare accordingly.
Passive marketing as a form of marketing organization is no longer applicable in the environments faced by most industrialized country firms today. Nevertheless, in some firms, the product concept still exists - as a rule, these are industrial and financial (for example, insurance) companies. Lack of market orientation is the main reason for many bankruptcies. A similar mentality is characteristic of Eastern European firms, which unexpectedly for themselves are faced with a free market, competition and all the difficulties that come with it.
So, the dominant business philosophy of a commodity-oriented company can be formulated as follows:
The key to a successful business is the production of quality goods and services at affordable prices. Good products and services do not need advertising. To reduce costs, goods and services need to be standardized as much as possible.
Until recently, the commodity concept also prevailed in developing countries, where it found adherents in the person of economic development experts. But even there, marketing can play an active role and contribute to the development of the economy.
Operational Marketing: Sales Oriented
Operational marketing is dominated by sales orientation. In Western Europe, this management approach was progressively introduced in consumer goods firms in the 1950s, when demand was rapidly increasing and the necessary production capacity was available. At the same time, despite the rapid growth of markets, distribution systems were in their infancy and were not highly efficient.
The reasons for the formation of a new approach to marketing management were the following changes in the economy:
As for the organizational structure, these changes in priorities lead to the creation of sales department, or commercial department, and also to the rearrangement of functions (Fig. 1.7). The sales department is entrusted with the creation of a sales network, the organization of physical distribution, advertising and sales promotion. He is also involved in market research, the importance of which is becoming increasingly important. For example, a firm might research shopping habits, advertising effectiveness, branding and packaging impacts, and more.
In a market economy, the role of marketing is to organize free and competitive exchange and effective communication between the seller and the buyer to ensure that the supply of goods and services coincides with the demand for them.
Exchange is the physical flow of goods between a producer and a consumer.
Communication is the flow of information before, during and after the exchange, aimed at effectively aligning supply and demand.
The distribution process is responsible for organizing the exchange of goods and services, the task of which is to transfer products from the state of production to the state of consumption. This "flow" of production into the state of consumption creates three types of benefits: the benefit of the state, the benefit of space, and the benefit of time.
The creation of the benefit of the state means the totality of all material transformations of the transfer of the goods to the usable state (fragmentation, packaging, sorting, etc.).
Place benefit creation involves spatial transformations (transportation, geographic distribution, etc.) that place the product at the disposal of users at the point of use, transformation or consumption.
Creation of the benefit of time means temporary transformations (mainly storage), thanks to which goods become available to users at the time they need.
It is thanks to these functions that the manufactured goods fall into the “field of vision” of target consumers, which creates favorable conditions for the coincidence of supply and demand.
An exchange can only take place if potential buyers are informed about the existence of goods and (or) about their properties. The development of knowledge of manufacturers, distributors and buyers is provided by marketing communications.
In a typical market, seven communication flows can be distinguished (Fig. 1.1). Before investing money, the manufacturer collects information to determine the needs and desires of the buyers, which constitute the opportunity that is beneficial for him, the manufacturer. Likewise, a potential buyer conducts research on supplier offers. After the start of production, the manufacturer starts the communication program.
The "immaculate circle" of economic development
Marketing initiates a "blameless" circle of economic development (Figure 1.2). This development process includes the following stages:
1) Marketing helps to identify insufficient or unmet market needs and stimulates the development of new or improved products.
2) Marketing develops an effective marketing program to create and / or increase market demand for these new products.
3) An increase in demand entails a decrease in production costs, which allows to reduce prices and thereby contributes to the emergence of new groups of buyers on the market.
4) The resulting market expansion requires new investments in production capacity, which creates economies of scale and stimulates further research and development to create new generations of products.
Marketing contributes to the development of democracy in business because it:
1) initiates an analysis of consumer expectations;
2) determines the adoption of decisions on investment and production based on anticipated market needs;
3) takes into account the variety of tastes and preferences of consumers (which is reflected in the segmentation of markets and the development of improved products);
4) stimulates innovation and entrepreneurship.
