The importance of Marketing. Assessment and analysis of importance of marketing concepts to an organisation with recommendations.
...ognition the organisation be internally generated or externally influenced by situational factors and other external influences. There is little THE ORGANISATION as an organisation to influence internal processes of customers. However as a company THE ORGANISATION could influence using external factors such as information provision, or advertising. It is important that THE ORGANISATION gives information in as many ways as possible. Through the media, through sales people informing customers, through advertising. This is important for the organisation to inform the customers. This could work in two ways. Firstly the field based team could help identify a customers requirement and inform the customer about THE ORGANISATION's offerings so that when they make their decision hopefully THE ORGANISATION have helped to influence that. Or if information about THE ORGANISATION offerings is readily available and informative, should the customer recognize a need then they are aware of what THE ORGANISATION has available in the market. Another factor in the process is the information search. This is where the customer researches how their problem the organisation be solved. As mentioned earlier if THE ORGANISATION is already making the customer aware and informed using all available methods then this could be key in winning or retaining customers. The next step is information evaluation. This is where the customers evaluate the information that they have gathered in order to make an informed decision. All that a company does at this stage is ensure that they do all they the organisation to help the customer in this evaluation. If the customer needs further information, if the customer has follow-up questions. Ensure that THE ORGANISATION has differentiated itself from the competition. Then the decision, this may not be easy. In the organisation it is key that we have understood the customers needs in order that we have put forward the best solution possible to meet the criteria both technically organizationally and from an underlying needs point of view. It is important that the team from THE ORGANISATION have understood the whole picture. It may be that the customer makes a decision for example on a combination of technical capability, ease of installation, price and relationship with the vendor. All of these elements could have an influence so it is important that THE ORGANISATION recognizes this and covers all angles. Often after a decision is made ‘ post decision evaluation’ is made. It is important at this stage in the process that THE ORGANISATION lives up to expectations. It is key that we retain customers as they are hard to win in the first place. If the solution and service do not live up to expectations then we may lose this customer in the future. Here the company could also use further advertising to reinforce the decision made. Another method by which to consider the decision making process is the AIUIAPR model. This model again considers the changes customers move through when making a purchase. This model advocates that at each stage the organisation be influenced by various factors which again that of individual or group or situational influences. See Figure 2.3. For the various stages. It is important here to ensure THE ORGANISATION’s customers are aware of our product or service. If our customers aren’t aware THE ORGANISATION will not be considered. The offering must be relevant to THE ORGANISATION’s customers’ interest, need or want. It must be made clear how the offering meets the customers’ need or want. THE ORGANISATION must ensure that the customer has a positive attitude towards the product. Product. This is where the customer purchases the product. THE ORGANISATION wants customers who will purchase again. Figure 2.3. The AIUAPR Model (Mercer 1996) This model is not a complex one but is very important to THE ORGANISATION has it helps to identify at which point the company the organisation influence the customers decision making process. The final part of the customer behavior discussion of this report focuses on organisation buying behavior. This is very important to THE ORGANISATION as a company it is generally large complex organizations that are our largest customers. In these types of organizations there us rarely one decision maker, there is instead a complex group of people involved in this process. The reason understanding of this is key to THE ORGANISATION’s success is that we understand the number of people and types that we have to influence in order to have a successful sale. Webster and Wind (1972) identified the following roles as being possible roles in the buying process particularly in large organizations. These are as follows: · Initiators - They request something is purchased for whatever need or reason. · Users - These will be the people using the product or service. · Influencers - These are quite often technical organization people with some expertise in the product or service. · Deciders - The decision makers. · Approvers - These are the people that formally authorize the decision. · Buyers - The department with formal authority. (Purchasing.) · Gatekeepers - These are people who have the power to stop resellers reaching other members of the above group. Kotler (2000) takes the view that five people roles could be part of the decision. Initiator - the person who first suggests the idea of the purchase. Influencer - a person who’s’ view or advice influences the decision. Decider - the person who decides whether to buy, what to buy, how to buy it or when. Buyer - the person who makes the final decision. User - the person who uses the final product or service. As one the organisation see many of Kotler and Webster and Winds roles are similar. The key element for THE ORGANISATION is that the company must identify the roles in any particular sale and who fulfills those roles. We as a company must have as much influence over the process and the stakeholders in the process as possible in order to succeed. 2.3 Segmentation, targeting, positioning and relationship building. Lancaster and Massingham (1999) observed that markets were made up of several groups or sub markets. They believed that the people or customers within these groups were similar in many ways so marketing could be targeted towards that subgroup in terms of the product offering, pricing and other elements of marketing strategy. This had developed over time to become target marketing. The process of target marketing has 3 stages. See figure 2.4. Figure 2.4.Target M marketing. (Lantcaster) (Lancaster and Ancaster & Massingham) The first stage of the process is segmentation defined by McDonald and Dunbar (1998) as: ‘Splitting customers, or potential customers within markets, into different groups and segments, within which customers have the same, or similar, requirements satisfied by a specific marketing mix.’ Segments could be geographical, organisational, behavioral or demographic to name a few. Segmenting THE ORGANISATION customers could benefit us in the following ways. · Segmentation highlights that customers the organisation be grouped together in ways that meet common needs. This focus on more specific groups saves money and time and increases the effectiveness of marketing strategy. · THE ORGANISATION the organisation use effective segmentation to better design products and services to meet customer needs better than those of THE ORGANISATION’s competitors. · Segmentation makes the assumption that cost, and convenience the organisation be utilitised to further satisfy customer needs and satisfaction. This way THE ORGANISATION the organisation influence customers’ willingness to choose THE ORGANISATION products and services. · The idea of segmentation advocates that the needs of a group of customers could be predicted by the commonality with their sector or segment. There are a number of characteristics that are necessary if a segment is worth targeting such as size, identity, relevance and accessibility. However if these are met it is of great benefit for THE ORGANISATION use marketing segmentation as a tool to enhance the success of the company. THE ORGANISATION could segment customers into groups such as by industry or perhaps the solution types such as enterprise management or information management for example. Once a company had used segmentation to group customers within the market then choices have to be made on which segments to target. Within organisation there are a finite number of resources it may mean only certain segments the organisation be targeted and as such there must be focus on those most lucrative segment for THE ORGANISATION. Lancaster & Massingham (1999) commented on the following factors as being of importance when selecting a segment. · Segment size and growth potential - a segment must be of a size worth targeting and have growth potential in order to be worth consideration. · Profitability of the segment - If is important there this is profit to be made from the segment no matter how large. There must be money to be made. · Current and potential competition - It is of benefit if there is less competition within a segment giving opportunity for THE ORGANISATION to take the largest market share. . · It is important the THE ORGANISATION is the capable of following up the success in a particular segment, do we have the right Resources. For example from an IT perspective. If we target a particular segment of the software market and have success with a particular product, Support perspective. The organisation we resource it? If not THE ORGANISATION may need to reconsider approaching that segment. There are other elements of targeting, in the way that a company approaches a market. Undifferentiated targeting is where the company ignores the differences within segments. The approach here is that the company would target everyone everywhere in the same way. There are benefits to the approach in that money the organisation be same by doing all marketing in bulk in the sense of advertising and distribution etc. Differentiated targeting is where the organisation does target more than one segment but the offer changes according to the segment. In this approach the company meets the specific needs of each segment. Another approach is Focused targeting. The company here targets on one segment only. The approach is better for niche companies where it the organisation build an approach based on expertise and knowledge and understanding of the particular customer. The final approach is customized targeting where there again is a high degree of specialization. The Internet has lead to this being more possible and accessible and less expensive than once was. For THE ORGANISATION it would be beneficial to consider differentiated targeting, although this may be more costly, considering the particular market of IT using differentiated marketing the campaigns could be more successful and move towards a more customer focused approach. Once the segmentation and targeting approach has been established THE ORGANISATION must consider product positioning to ensure that the product or service fits the particular segment in terms of its strengths, weaknesses, benefits, costs and differentiating factors. It is equally important that THE ORGANISATION builds relationship with its customers. Once all the aforementioned marketing strategies have taken place it is important that THE ORGANISATION retains those hard won customers. This is a complex area and much time could be spent analyzing this fundamental area of Relationship marketing however for the purposes of this report a brief overview will be given of relationship versus transactional marketing and the benefits of relationship marketing. Transaction marketing is where the focus is on getting new customers. The consideration is one transaction at a time. All activities are based around this. A different approach to this is relationship marketing. The focus here is on retaining the existing customer. The aim is to discover what could create new value for these customers in order to keep them. The idea is that the customer should play a role in defining what they perceive to be of value. The theory on which this is based is that the more satisfied the customer is the longer the customer will stay with the company. The aim is that THE ORGANISATION would develop a loyal customer base thus generating greater returns for THE ORGANISATION and the customer. Gordon (1998) put emphasis on the costs of acquiring a new customer compared to the costs of retaining existing customers. This was put forward is costing five times as much to recruit a new customer. See below figures 2.5 and 2.6 for more detail on transaction and relationship marketing Transaction Marketing Relationship Marketing Focus on single sale Focus on customer retention Orientation on product features Orientation on customer benefits Short timescales Long timescales Little emphasis on customer service High emphasis on customer service Limited customer commitment High customer commitment Moderate customer contact High customer contact Quality if primarily the concern of production. Quality if the concern of all. Figure 2.5 - Source Christopher et al., quoted in Baker, 1994 p724. Consumer packaged goods. Consumer durables. Industrial Goods. Services. Figure 2.6 - Transaction versus relationship marketing continuum. Source Gronroos, 1991, p11. THE ORGANISATION is already moving more towards a relationship marketing type of approach, which as highlighted by figure 2.5 is more suited to its kind of offerings. Typically organizationally people purchasing computer software want a more long-term relationship to ensure that they are supported throughout the duration of the contract to this approach benefits both parties if used effectively. There are many benefits to retaining customers not least the reduced costs as already mentioned. Another benefit could be reduced time to market through involving customers in the development of new products. This is particularly relevant to THE ORGANISATION as the company involves customers in testing Beta software before it comes generally available. Customers of benefit to THE ORGANISATION because the company gets new software test this but it benefits the customers also because the organisation suggests enhancements etc so that the product may be more attuned to their needs. Another benefit of relationship marketing is a reduced business risk. This is because the organisations committed and loyal customers are less likely to go to other suppliers, which help to stabilize revenue stream. Although the emphasis is on the company ensuring the customers stay satisfied and thus loyal. There has been short explanation of relationship marketing here, which is focused on explaining the concept and particularly the benefits of relationship marketing to THE ORGANISATION. THE ORGANISATION as a company has already taken some steps towards this approach through its customer relationship team and is showing some results in terms of more satisfied customers. However there is much to today and the next focus should be on moving customers up the relationship ladder to hopefully become a committed partner of THE ORGANISATION and continuing the good work already started. 2.4. The Marketing Mix. In this section of report the ‘marketing mix’ is to be discussed with focus on the relevance of this to THE ORGANISATION. In the section the 4C’s of the marketing mix will be described, with a few examples of elements of that part of the framework given such as branding with customer needs and wants and advertising as a vehicle for communication within the sector.Unfortunately within the confines of this report it will be impossible to do justice to this important area of marketing, so many of the subject areas are mentioned briefly with a short description. However the key message is that the 4Cs are extremely relevant to THE ORGANISATION and its marketing strategy, particularly with its customer focus. Although all of the 4Cs are relevant to THE ORGANISATION pricing and convenience are generally managed quite well presently at THE ORGANISATION so there will be more focus on customer needs and wants. Another key aspect of marketing is the idea of matching the wants and expectations of the customer to the products and services provided by the vendor. In the situation the focus for the organisation is to design their product and service to meet those customer wants and expectations. There are a number of frameworks that look at the relevant factors not least being the 4Ps, Product/service, price, place: the distribution system used to supply the goods or services and promotion: how the goods or services will be promoted advertising, marketing etc. Others refer to the 7Ps to include processes, people and physical evidence.The purpose of these frameworks is to use the elements to establish the best ‘mix’ to meet customer needs. The aforementioned frameworks have been described as too focused on the organisation rather than the customer requirement. So for the purposes of this report the focus will be on the 4Cs framework that is more customer focused. The 4Cs are: · Customer needs and wants. · Cost. · · Convenience. Customer needs or wants applies to what the customer requires. This is as a concept is so relevant to THE ORGANISATION as a company. It is key that THE ORGANISATION as an organisation establish what the customer really wants from a product or service because if the company fails in the area then the customer is likely to go to the organisation that does listen and understand their needs and wants and translates this into their offering. Even if the company that is not customer focused manage to sell their products to a customer ultimately if this does not meet the customer need this product will be unused and licenses are unlikely to be renewed and the customer will not be retained. If the organisation focuses in customer needs and wants the result is that the customer is happy that their needs are being met and the vendor is happy because their products are being sold and used and repeat purchasing is likely. Kotler (2000) defines a product: ‘A product is anything that the organisation be offered to satisfy a want or need. Products that are marketed include physical objects, services, persons, places, organizations and ideas’ This statement emphasizes the fact that the purpose of a product or services is that it satisfies a need or want. Any product, be it a good or a service should be considered in terms of the features or benefits it contains the idea being to ensure that it fulfills customer needs and wants. Another aspect of customer needs and wants is branding. THE ORGANISATION has just started to put focus on its branding as there has been a realization how important this the organisation be in terms of differentiating the product. The aim is to have a brand that is respected, well know and trusted. The idea of branding is based around customer perception. Foc...