Applying Decision-Making Theories in Selecting Marketing Approaches - Essay Example

? Marketing affiliation Marketing The evolution of marketing has been significant in shaping the way in which business make decisions on their marketing strategies. According to Tapp (2005) the development of marketing tools has complicated the approaches organizations use in selecting marketing strategies. It is an obvious scenario in the current corporate world the heightened level of competition among business entities. The rising level of competition has heightened the seriousness of the approach to marketing strategies by organizations. However, regardless of this change, the ancient marketing strategies remain of significance in the corporate world (Tapp, 2005). The ancient marketing strategies include direct marketing, the use of free samples, media marketing, sales representatives and Corporate Social Responsibility. In words by O'guinn (2008) the ancient marketing strategies form the basis from which development of marketing is achieved. The above factors shape the two major philosophies of marketing. The two are different in terms of their approach to the consumers. The transactional approach detects its target market then strategically pleases this specific group of consumers while the relationship approach is a generalized approach to the market (Howard, 1997). The approach seeks to impress the entire market by creating stable market with the society. The approach to marketing uses the implementation of the 4p’s of marketing. They are the price, product, place and promotion (Plunket, 2008). The price refers to the pricing of the commodity at a price that is suitable to the consumer are also gather the required profit. The product refers to the quality of the product supplied to the market and its presentation to the market (O’guinn, 2008). The place refers to the most suitable location for the sale of their products depending on the nature of the population or a particular area. Promotion refers to the tools of advertising used by an organization. In words by Plunket (2008) this philosophy is a definition of a typical modern marketing strategy. The author further argues that the decisions to research on every marketing aspect before indulging into a market is very important if a marketing strategy is to effective (Tapp, 2008). Additionally, organization using this strategy only put into consideration the most suitable way to lure and please a specific target market. The relationship philosophy dwells on creating lasting relationships with an entire market (Tapp, 2008). Different from the other philosophy, this particular one does not have a specific target market. According to Howard (1997) in implementing this approach an organization is usually advised to practice an effective Corporate Social Responsibility. This includes participating in charity events, organization social activities like sports day, offering of significant discounts on specific days like holidays and developing infrastructure of a particular region (Plunket, 2008). In an argument by O'guinn (2008) this approach acknowledges the characteristic of human nature. The author argues that, pleasing consumers through incentives may attract the to a business entity faster than using a strategic market approach (O'guinn, 2008). In this case, an organizations success in marketing is greatly dependable on how well it satisfies the appraisal need of human nature. In the modern corporate environment, organizations apply both theories depending on the product the company indulges in, the nature of the consumer market and the competitiveness of a market. It is for this reason that business entities have incorporated the use of decision making theories to determine the suitability of the marketing philosophy to implement. Decision making theories are based on the organizations tools of trade, the SWOT analysis, type of trade, the uncertainties involved and the aims and objectives set by an organization (Tapp (2005). Applying decision making theories in selecting marketing approaches I. Normative and descriptive decision theory This theory identifies the best decision to be taken. However, there may not be a perfect decision but the theory aims at selecting the approach with the highest probability of achieving the best results. Morris (2004) argues that when applying this theory, most organization reach to conclusion of using relationship marketing. This is because the human nature can be easily predictable hence enabling an organization to come up with accurate modes of capturing the attention of the consumers. Howards (1997) argues that appeasing the consumers is the most accurate decision when marketing. Through normative and descriptive decision theory, an organization may be able to compute the most effective way retaining the already captured consumers. II. The probability theory Different from the normative and descriptive theory, the probability theory uses facts and figures that can be accurately developed and explained (Morris, 2004). For example, an organization may have a set profit objective goal of $2 per commodity. To achieve this objective, the organization should have a specific pricing strategy regardless of the consumer’s reaction and perception of the decision. According to Morris (2004) the probability theory supports the transactional approach. He further argues that the transactional approach has the ability of computing an already known probability. For instance, an organization may set aside resources for promotion depending on the financial status of the organization. Additionally, the probability theory shields an organization from incurring great losses and facing uncertainties. Under the probability theory, every investment made on a marketing project is based on a specific goal, budget and timeline. III. General criticism In general criticism a decision is based on the known unknowns and not the unknown unknowns. This theory effectively fits the transactional approach since an organization has a known budget for the marketing strategy but the reaction of the consumer is unknown. When applying the relationship approach in this theory, one would be dealing with two unknowns. Firstly, there is an unknown budget of the activities that would create a lasting relationship among employees and the reaction of the employees to the marketing approach is still unknown (Howard, 1997) In an argument by Morris (2004) the relationship between consumers and a marketing strategy is a constant unknown factor and it is reasonable when an organization comes up with a known internal budget for the marketing strategy to create a balance. He argues this in support of the transactional marketing approach which has a high probability in protection an organization from unnecessary risks and losses. Influencing factors in the selection of a marketing approach One of the greatest consideration in this selection is the form of transaction an organization is involved. The transactions are of two types; business to business transactions or business to consumer transaction. In business to business transaction, an organization deals with other corporate in their dealings. This means that there is no direct contact with the consumers. When marketing for this type of transaction, the relationship marketing approach is the best approach to implement. This is because business to business marketing is purely based on the relationship between tow enterprises. In words by Tapp (2005) business to business marketing does not require the same transactional a consideration compared to business to consumers marketing. In business to consumer marketing the transactional approach is the best approach. In this scenario, the market is large and the level of uncertainty is greater. For this reason, the 4ps of marketing should be effectively considered. Unlike in business to business marketing, the consumer market has many factors to please which requires maximum consideration of the nature of the market in terms of demand and competition (Tapp, 2005). Another factor considered is the level of competition in the market and the type of competition. In words by Plunket (2008) a market with high competition requires a marketing strategy that will capture, please and retain consumers. He further argues that the approach should be mainly considering attachment to the target market (Plunket, 2008). The best approach for this type of competition is the relationship marketing approach. In market with low competition, an enterprise uses the transactional approach which is more strategic and shields an organization from unnecessary uncertainties. Transactional marketing approach is also effective in international companies. In international business, there is a lot at stake in terms of shipping costs involved, the safety of products and the cost of the legalities involved in the trade. Under these provisions, any strategy implemented requires perfection and should mitigate the high risks involved (Tapp, 2005). In transactional marketing, there calculation of the effectiveness of the place, the price, the product being traded and the effectiveness of the promotional strategy involved. Additionally, consumers in the international market are not greatly concerned with the relationship with the trader. They are mostly concerned with quality of goods traded and the quality of services being given for the products (Weinberg & Pehivan, 2011). Conclusion It is an obvious assumption that the type of marketing approach an organization implements greatly depends on the type of organization, nature of the market and the effectiveness of the approach in meeting the organization’s demands and goals (Tapp, 2005). However, the modern business environment is highly competitive and an organization needs to have greater competitive advantage. For this reason, most organizations implement the both marketing approaches. This enables them to be versatile in adapting to new trends and emerging consumer concerns. In words by Weinberg & Pehivan (2011) having in place two marketing approaches is important in the modern business environment since it increases the effectiveness of the organization’s marketing approach. Real world examples Adidas Group uses the relationship marketing approach. The organization indulges in numerous global events that benefit the society. Additionally, the organization organizes charity events with the aim of raising funds for unfortunate people across the globe. This is a perfect implementation of the relationship marketing approach (Adidas Group). In Costa Coffee the transactional approach is used to maximize the organization’s sales. In the organization, the corporate and partnership relationship are greatly considered than the consumer relationship. Through corporate relationship, the organization is able to add investment and come up with more quality goods. It focuses on creating quality products, locating its branches in perfect places for maximum exposure to the market, uses advertisements as a form of marketing which is a tool by which a large number of consumers can be reached and its prices greatly depend on the location and the commodity supplied (Costa Coffee). References Adidas Group. Marketing Approach. Retrieved from http://www.adidas-group.com/en/investorrelations/strategy/adidas/. Access date 1st May, 2013. Costa Coffee. Costa Coffee Shops. Retrieved from http://www.costa-business.co.uk/costa-coffee-shops/. Access date 1st May, 2013. Howard, F. (1997). Decision Analysis: Introductory Lectures on Choices Under Uncertainty. New York: McGraw Hill. Morris, D. (2004). Optimal Statistical Decisions. New York: Wiley Classics Library O'guinn, T. (2008). Advertising and Integrated Brand Promotion. Oxford: Oxford University Press Plunket, W. (2008). "Management: Meeting and Exceeding Customer Expectations". New York: Cengage Publishers Tapp, A. (2005). Principles of Direct and Database Marketing. NY: Prentice Hall. Weinberg, B. & Pehivan, E. (2011). "Social spending: Managing the social media mix". MA: Kelly School of Business. Read More