Influence of Technology on Strategic Marketing Management Practices - Essay Example

?The Influence of Technology on Contemporary Strategic Marketing Management Practices Introduction Conventional models of management are generally unsuitable for a large number of markets nowadays. The tempo of change, the immediate accessibility of information, the importance of attracting not just customers but building competitive advantages or establishing a competitive position in markets, and rapidly advancing technology are few of the most observable reasons. In all fairness, a large number of existing companies have survived by restructuring or improving business practices and operations integrating computer-aided design (CAD), just-in time (JIT) manufacturing, and total quality management (TQM). As argued by O’Conner (1998), the “impact of information technology on marketing is dramatic”.1 This essay discusses how technology is affecting strategic marketing management practices. This essay also explores how strategic marketing management practices have been strengthened by conventional and latest information technologies. Examples from the health care organisation are used to support the arguments. An Overview Above all, it is important to consider the concept of ‘strategic marketing management’ to examine how technology has influenced marketing. As defined by Jobber (1998), strategic marketing management is “the approach a firm takes to securing and retraining profitable relationships with its customers.”2 It was demonstrated by Leverick and colleagues (1998) that numerous organisations have transformed their marketing strategies through the influence of technology.3 For instance, in the manner an organisation communicates with or approaches its customers and the way it carries out marketing activities. Technology, in particular, information technology (IT), helps an organisation build competitive advantage, enhance managerial outcomes, and attain more accurate and wide-ranging environmental scanning. As stated by Porter and Miller (1985), “the usage of IT enables companies to increase internal efficiency.”4 The application of information technology in marketing strategy has been talked about since the 1960s. Yet, it is only recently that strategic management has been gradually reinforced or remodelled by information technology5 (e.g. Internet marketing, database marketing, decision support systems (DSS), etc). Gaur and colleagues (2003) supports the earlier assumption that “the technological revolution is changing the nature and activities of the marketing function.”6 Traditional and emerging technologies allow the customer to communicate efficiently, directly, and openly with the marketers. By means of technology, companies are becoming increasingly informed about their customers in a more cost-effective way, which allows them to carry out direct marketing, particularly via interactive technology. According to Foskett (1996), the Internet has transformed marketing ‘from mass marketing to customised one-to-one marketing’7; the Department of Trade and Industry (DTI) views e-marketing as a quantum leap for marketing because it facilitates genuinely customised and individualised marketing, availability of lower costs and the mass market for smaller companies.8 However, in the 1980s and 1990s, oversupply of information/data became a crucial problem. Data overload resulted in less accurate and appropriate management data. Technology created the groundwork for a better data management to work out this issue.9 Information technology provides ingenious processes of data gathering about customers’ needs, behaviour, and character. Examples of these data collection methods are online surveys or electronic mail surveys. Database methods, in addition to the Internet, have a considerable effect on strategic marketing as they help marketers refine outcomes in seven major areas10: (1) understanding customers; (2) managing customer services; (3) understanding the market; (4) understanding the competitors; (5) managing sales operations; (6) managing marketing campaigns; (7) communicating with customers11 Figure 1. Impact of Technology on Modern Marketing *image taken from Shajahan (2004, 13) As improved and greater data/information are becoming more available, sales marketing campaigns are becoming more focused. Technology has allowed marketing to implement a ‘pull strategy’—involves huge investment on advertising to create and heighten customer demand for a product and/or service-- on via the Internet, telemarketing, videotapes, etc, rather than the conventional push marketing operations— requires promotional campaigns and a sales force to generate customer demand for a product and/or service. The Impact of Technology on Strategic Marketing Management Practices Marketing normally involves tasks such as marketing research, new product development, advertising campaign, sales promotion, direct selling, and distribution. As stated by Kotler (1997), so as to effectively deal with the evolving needs of customers, companies plan an ‘offering mix’ of prices, products, and services and implement a ‘promotion mix’ of telemarketing, direct mail, public relations, sales forces, advertising, sales promotion, and the World Wide Web to touch base with the target customers and business channels.12 Normally, companies have to strategically initiate reforms on their marketing costs, sales operations, and prices to complement their corporate goals. Successful companies are those that can effectively deal with the demands and needs of their customers cost-effectively and expediently and with useful and efficient communication. One of the main instruments employed by marketing managers is the 4Ps—promotion strategies, place, price, and mix of product. It is employed as a strategic marketing instrument controlled by marketing professionals. Winning marketing campaigns depend as much on the relationship and unity between components of marketing mix. Frances and colleagues (1997) claim that attaining such mix should be the result of a broad structure of strategic marketing planning, operation, and management.13 Impact of Technology on Marketing Mix In current markets, a solid technological foundation, stimulated by private and public investments on research and development, encourages competitiveness and consistent progress. Technology influences all marketing mix components, developing new products and/or services to put on the market, enhancing current products and/or services, and lowering prices via economical production and delivery operations. Such influence of technology on strategic marketing is speeding up considerably, with the World Wide Web changing the way organisations marketed and distributed goods, and producing entirely new industries, like interactive advertising businesses, Website developers, and organisations that gave customers the chance to carry out business transactions over the Internet. It is possible nowadays to modify the marketing mix to accommodate potential and desired customers. Information technologies, especially those interactive ones, have facilitated continuous monitoring of customers’ buying behaviour, preferences, and consumption patterns. Market leaders have effectively applied this information about their desired customers to create and develop their marketing mix. A number of firms have applied such information to customise their products and/or services to meet customer needs and preferences and also to improve their distribution operations. They utilise technologies such as extranet and satellite mapping of different markets. For instance, Hindustan Level, which boasts a massive distribution structure including rural and urban markets, has established an extranet. The goal of which is to improve the efficiency and responsiveness of its supply chain to the needs of customers. In addition, via its website, it plans to link up its customers throughout the region.14 Through the Internet, interactive kiosks are continuously developed to test the product line of Lakme and Ponds. Such kiosks make information on a range of products available and also allow the customers to be familiar with the process of searching and browsing for a wide array of products. These kiosks help customers decide.15 Hence, the central goal of the marketing mix is the recognition of customer needs and meeting them through helpful service. Impact of Technology on Marketing Research and Information Technology is making marketing research and information easier and more accessible. Customer relationship management is being improved by incorporating information from every customer network and merging those data to strengthen customer retention or loyalty.16 Information technology allows prompt data collection and internal research to recognise and meet customer needs. For instance, company responses to communication via fax, telephone, and mail as well as to e-mail complaints can be utilised to bolster customer value, loyalty, and satisfaction. The adoption of computer technologies and telecommunications is providing marketers the opportunity to access an increasing range of important data sources associated with customer consumption pattern and purchasing behaviour, industrial developments and trends, and corporate forecasts. Interactive technologies can be productively used to obtain precise and relevant data with negligible customer contact. Almost all marketing researchers have access to teleconferencing, e-mail, etc. In reality, a large number of companies employ marketing information systems to link up these technologies and put in order the entire range of marketing information accessible to them. Almost all marketing information systems require internal databases. These databases help marketers utilise a huge volume of data relevant to decision-making in marketing, such as government economic documents, newspaper reports, internal sales records, and so on. Information technology has facilitated the growth of databases as a tool for strategic planning and increased customer satisfaction. However, the growth of information technology and databases has merely heightened the demand for conventional marketing research and for identifying their strong and weak points in gathering useful or accurate marketing information. Decision support systems (DSS) are not practical or economical. Even though a DSS informs managers about their external environments, it normally does not give sufficient information about the most appropriate responses to certain situations, such as when the company is confronted with a new promotion campaign or a new product.17 When feasible information is needed to deal with particular marketing issues or prospects, traditional marketing research continues to serve a very important function. Impact of Technology on Customer Service Interactive technologies merge telecommunications and computer resources to build software that customers can manipulate. Empowering customers facilitates more effective communication, which can create and strengthen relationships. Interactive marketing gives instant access to important product specifications when the customer searches for it, and it is ever more occurring on forums, blogs, and social media sites. As stated by a CEO, social media is “a catalyst for fresh thinking on how companies can improve customer service.”18 Interactive marketing gives customers and marketers the opportunity to modify or personalise their communication. Customers could request information from companies, paving the way for customised marketing. In addition, they can inform the company about the strengths and weaknesses of its product, and they can simply end the transaction and go to the next one. As interactive marketing campaigns become more widespread, the task becomes more focused on drawing and sustaining customer interest. Impact of Technology on Customer Relationships Management It has been understood that the success of a business is the outcome of the harmony between marketing and technology. Numerous organisations think that combining technology with customer needs is an integral success ingredient in building and sustaining customer relationships. Nowadays companies which are not able to realise the asset worth of their customers, and that modify their marketing costs and strategies to obtain and maintain the top assets, would frustrate mass marketers.19 (Blattberg 10) The open and efficient movement or transfer of information about aspects like cost and finance, suppliers, benchmarks, logistics, operations, are turning out to be essential in building, strengthening, and sustaining relationships in the highly technological age. Impact of Technology on Competitive Position In these currently technologically competitive markets, aggressive marketing campaigns derived from the influences of technology are apparently the key to understand the opportunities and risks of heightened competition. Marketers, according to Porter (2001), have to recognise the powerful influence of sophisticated technologies because a competitive position is more and more reliant on the use of superior technologies.20 Technological developments lead to productive and well-organised marketing operations and exceptionally advanced technologies have been successful in presenting more accurate and appropriate solutions to marketers. Impact of Technology on Segmentation, Targeting, and Positioning (STP) Technology provides an innovative, original, and accurate analysis of market segmentation and the creation of a strong and long-term competitive advantage. A dynamic and inclusive marketing mix can be developed for specific target marketing via the use of technology. For example, a hospital which has a well-designed and useful website can successfully and powerfully endorse its services by customising its offering to individual customers. Moreover, marketers can get hold of the target market via the application of geo-demographic software programmes which provide assessment, mapping, and description of customers in a given market.21 Technologies allow marketers to determine certain opportunities and offer particular products and/or services for particular target markets. The e-marketing strategy guides the decision of the target markets, segments, positioning and hence, the plan of the preferred marketing mix rooted in the goals to be realised. Even though the marketing strategy of traditional and online companies can be varied, the goals may be similar as regards to increasing profits and sustaining customers. As online companies could support their STP entirely with their strategic e-marketing plan, traditional companies confront a dissimilar factor, because these companies have to incorporate traditional and online marketing strategies, and hence make a decision whether to use the same or different STP strategies.22 As stated by Bickerton and colleagues (2001), “the Internet can be used to help the marketer identify more sharply the segments in market”, while companies, because of the convenience and uncomplicated processes of information gathering in the Internet, may “be able to more accurately segment customers.”23 Nevertheless, the marketing strategy and segmentation correspondingly, can “also be affected by the increased speed with which marketers can gather information through the Internet.”24 Still, since the Internet can facilitate an improved level segmentation, and hence contribute to the recognition of and knowledge about the customers, the targeting and positioning aspect of what the company will represent in the mind of the customer could be hampered.25 Effect of Technology on Strategic Marketing Management in Health Care Organisations Because health care organisations are technologically oriented, it poses a number of distinctive challenges to health workers in creating and executing competitive and effective marketing strategies. Above all, it necessitates a regular scanning of the internal and external environment and emphasis on new trends in this area. The influence of technology on competition creates a huge interest in strategic marketing management. New streams of technological development usually encourage competitors at another plane to penetrate the market. For instance, in the health care organisation, technology has diffused to a certain point that operations or treatments previously administered exclusively at primary tertiary hospitals can presently, in numerous instances, be administered at community clinics.26 Moreover, technology widens the range of competition. Operations that could previously be administered exclusively in an in-patient clinical location can currently be administered in a doctor’s clinic. With disproportionate regulatory policies, several competitors do not have to acquire government permit to penetrate a market, like doctors in private profession, whereas other competitors should get a permit. Hence, technology forces health care companies to create marketing strategies against a possibly bigger group of other providers of a similar offering. Technological development demands any company to implement a wide-ranging perspective of its operations and to create strategies that will protect it from excessive reliance on any single revenue stream of a certain service. In reality, technology can significantly influence the revenue stream for certain services.27 Likewise, an organisation should sustain a wide-ranging perspective of its operations whenever there is a risk of a major technological change. The health care organisation is not impervious to these technological changes. Marketers in health care organisations gradually understand the powerful potential of information as an instrument for identifying and managing competition in the health care industry. Patient satisfaction, outcomes, quality, and cost are ever more becoming major components in health care communication and marketing attempts as, to a greater extent, competition is enlarging information demands. Informed health care users are requiring the availability of utilisation and cost information about their staffs, including numerical bounds of health care plan outcome based on their decision to purchase.28 Information, as well as the proper dissemination of that information, becomes an instrument for a perceptive health care marketer. Figure 2. Information Systems as a Marketing Tool *image taken from Vitberg (1996, 43) Ultimately, with the capacity to control, process, and store huge chunks of data directly from a computer, the health care marketer can take part in database marketing, where particular requirements of particular groups of customers can be determined, resulting in the development of committed services or plans. For instance, in order to strengthen customer relationships and loyalty, the marketer can locate families with a chronically ill dependent, and offer home-based care-giving services. Conclusions Innovation is the means of support of any organisation but it is an expensive, complicated, and risky endeavour. However, due to the continuous advancement of technology, the marketing function has to be actively innovative. The current developments in technology have spurred transformations in the manner in which organisations and particularly strategic marketing management can be performed. The impact of technology is tactically inside the organisation, particularly with regard to customer relationship management. Hence, organisations which are not able to adapt to rapidly and continuously changing technologies face imminent extinction. Technology, in particular, information technology (IT), positively influenced organisation by helping them establish a competitive position in the market, enhance the performance of the marketing mix, and attain more accurate and wide-ranging environmental analysis. Technology also helped organisations acquire and store huge volumes of information that they can use to develop marketing strategies appropriate for their target customers. Marketing research has been revolutionised by marketing information systems and databases. Technology has brought customers in direct communication with marketers and improved customers’ knowledge of products/services which consequently enhanced their purchasing decisions. 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