Chapter 1
Introduction
How was the offering distributed? What physical and service-based components is it made
of? What societal contributions, if any, positive or negative, do these offerings make? Are
other versions of these offerings available that meet your needs and the needs of society
better? These are some of the questions that marketers should ask themselves when die
signing, developing and delivering offerings to the customer.
In this chapter the core principles of marketing, incorporating the marketing mix, the
principle of marketing exchange, market orientation, relationship marketing, and service-
dominant logic, are all considered.
What is marketing?
The CIM (Chartered Institute of Marketing) and AMA (American Marketing Association)
definitions recognize marketing as a ‘management process’ and an ‘activity’, although many
firms organize marketing as a discrete department, rather than a service across
departments.
Nike, for example, uses a regional matric organizational structure, enabling marketing to
operate within and across departments, such as apparel, footwear.
What’s the difference between Customer and Consumer?
Customer is a buyer; consumer is someone who uses it.
Market Orientation
Developing a market orientation makes organizations more profitable in both the long and
short runs.
In a meta-analysis of market orientation studies, Kirca and colleagues conclude that market
orientation may be imperative (noodzakelijk) for survival (voortbestaan) in service firms
(dienstverlenede bedrijven) and the source of competitive advantage in manufacturing firms
(en de bron van een concurrentievoordeel in productiebedrijven).
Difference between Marketing Orientation and Market Orientation?
A company with a marketing orientation would be a company that recognizes the
importance of marketing within the organization, for example by appointing a marketing
person as chief executive officer (CEO), or to chair its board of directors (or trustees in the
case of a charity), or to the executive team more generally in a limited company or
partnership.
,Developing a market orientation refers to ‘the organization-wide generation of market
intelligence pertaining to current and future customer needs, dissemination of the
intelligence across the departments, and organization-wide responsiveness to it’.
So, a market orientation not only involves marketing, but also requires a focus on:
- Customer orientation, which is concerned with creating superior value by
continuously developing and redeveloping offerings to meet customer needs
- Competitor orientation, which requires an organization to develop an understanding
of its competitors’ short-term strengths and weaknesses, and its own long-term
capabilities and strategies
- Interfunctional coordination, which requires all functions of an organization to work
together for long-term profit growth
What Do Marketers Do?
Marketing is distributed throughout the organization and all employees can be considered to
be part-time marketers.
A functional may for marketing (figure 1.1)
Stakeholders (belanghebbenden vereisten):
1. Provide marketing intelligence and customer insight
2. Provide strategic marketing direction for the organization
3. Develop the customer proposition
4. Manage and provide marketing communication
5. Use and develop marketing and customer information
6. Lead marketing operations and programmes
7. Work with other business functions and third parties
8. Manage and develop teams and individuals
The Principal Principles of Marketing
Marketing involves a series of highly complex interactions between individuals,
organizations, society, and government.
Consequently, it is difficult to develop general principles that apply to all contexts.
However, we can make at least some law-like generalizations. According to Leone and
Shultz, these include the following:
- Generalization 1: advertising has a direct and positive influence on total industry
(market) sales: all advertising done at industry level serves to increase sales within
that industry
- Generalization 2: selective advertising has a direct and positive influence on
individual company (brand) sales: advertising undertaken by a company tends to
increase the sales of the particular brand for which it was spent
- Generalization 3: the elasticity of selective advertising on company (brand) sales is
low (inelastic): for frequently purchased goods, advertising has only a very limited
effect in raising sales.
, - Generalization 4: increasing store shelf space (display) has a positive impact on sales
of non-staple grocery items, such as products bought on impulse (for example ice
cream, chocolate bars) rather than those that are planned purchases, which are less
important, but perhaps more luxurious, types of good (for example gravy mixes,
cooking sauces). For impulse goods, the more shelf space you give an item, the more
likely you are to sell it
- Generalization 5: distribution, defined by the number of outlets, has a positive
influence on company sales (market share): setting up more retail locations has a
positive influence on sales.
Marketing as exchange
Marketing is a two-way exchange process.
Exchange relationships were seen to be economic and social.
Economic example: a consumer buying groceries.
Social example: the service provided by the police on behalf of society paid for by
government.
Examples of marketing exchange processes (figure 1.2)
The police > the public: keeping public order, including protection from crime and terrorism
The public > the police: public funds and cooperation (overheidsmiddelen en samenwerking)
Retailer > customer: goods and customer service
Customer > retailer: money, retail price for goods
The Marketing Mix and the 4Ps
- Product: for example, the offering and how it meets the customer’s need, its
packaging, and its labelling
- Place: for example, the way in which the offering meets customers’ needs
- Price: for example, the cost to the customer and the cost plus profit to the seller
- Promotion: for example, how the offering’s benefit and features are conveyed to the
potential buyer
, The Extended Marketing Mix
- Physical evidence: the aim here is to emphasize that the tangible components of
service are strategically important: potential university students, for example, might
assess whether or not they want to attend a university and a particular course by
requesting a copy of brochures or by visiting the campus to assess the servicescape
for themselves.
- Process: this aims to emphasize the importance of the service delivery. When
processes are standardized, it is easier to manage customer expectations: DHL
International GmbH, the German International express, transport, and air freight
company, is a master at producing a standardized menu of service options, such as
track-and-trace delivery services, which are remarkably consistent around the world.
- People: this emphasizes the importance of customer service personnel, sometimes
experts and often professionals interacting with the customer. How they interact
with customers, and how satisfied customers are as a result of their experiences, is of
strategic importance. For example, McKinsey & Company prides itself on the quality
of its more than 9,000 consultants, and it s2,000 research and information specialists
as an integral part of its offering
So in total the Marketing Mix 7Ps:
- Product
- Place
- Price
- Promotion
- Physical evidence
- Process
- People
Relationship Marketing, Service-Dominant Logic, and Co-creation
If marketing is about exchange, should marketing not also be concerned with relationships
between those parties that are exchanging value?
The concept spawned further evolution of marketing’s conceptual foundations. There was a
shift from the need to engage in transactions towards the need to develop long-term
customer relationships, including relationships with other stakeholders including:
- Suppliers
- Potential employees
- Recruiters
- Referral markets – where they exist, for example retail banks partly relying on
professional services organizations, including estate agents, for mortgage referrals
- Influence markets – such as regulatory authorities, politicians, and civil servants
- Internal markets, for example existing employees
