Marketing Management - Essay Example

Introduction Marketing management is vital for a successful business and for marketing management to be successful, it requires strategy. American Marketing Association (AMA) defines marketing management as “communication of strategies with an aim to meet the needs of decision making by educated executives that works in managing practical businesses” (AMA, 2013). Evaluation of key terms in the Definition of Strategy Provided by Johnson, Scholes, and Whittington (2006): Direction The key term direction in the definition provided by Johnson, Scholes and Whittington (2006) refers the direction or mission of an organisation. To achieve the direction stated, an organisation develops and adds marketing activities in order to achieve the desired direction. In simpler words, direction is the path that the organisation needs to take for the accomplishment of its desired goals and objectives effectively and efficiently (Zajac, Kraatz, & Bresser, 2000). Scope The term scope in the definition refers to the vision of an organisation. Scope is a combination of priorities energised by set of principles that is aimed to predict the future that brings uniqueness in the core business, the ideal principles of the business that conveys meaning into organisation’s functions and eventually helps an organisation to define its success (Fleisher & Bensoussan, 2003). Long-term Long term in this definition refers to the goals and objectives of an organisation that an organisation desires to accomplish in future. These goals and objectives are the ones that organisation aims to achieve over a longer period of time. Since these are the most important goals for an organisation, these are attained by matching organisation’s activities with these goals (Hoskisson, Hitt, Wan, & Yiu, 1999). In simpler words, this goal is a picture of where organisation wants to be in the coming 10 years. An example of long-term goal of an organisation could be said as becoming a leader in the market by providing the customers with superior quality products to satisfy their needs. In order to achieve this long-term goal, an organisation will try to enhance its operation by keeping its focus on this particular goal (Freeman, 2010). Resources The term resource in the definition refers to human, capital and natural resources that an organisation capitalises in order to attain its goals and objectives. An organisation constantly configures its resources to accurately meet the changing market environment. Human resource is the group of individuals that makes the workforce of an organisation. For an organisation to be successful, it needs to motivate and encourage its workforce to attain the desired goals of an organisation (Beer, Voelpel, Leibold, & Tekie, 2005). Natural resources are those resources that are used by an organisation for the production of goods and service. For an organisation that produces paper, timber is its required natural resource. Financial resources are the resources that are required by an organisation to pay for its expenses and to keep its operation in flow. All of these 3 resources help an organisation to effectively and efficiently accomplish its desired goals and objectives (Hitt, Ireland, & Hoskisson, 2012). Stakeholder’s expectation Stakeholders are those individuals that provide the organisation with required investment. These investments are necessary for organisations as it supports the organisations to continuously carry out its projects and operations (Pearce & Robinson, 1997). The term stakeholder’s expectation in the definition reflects the needs of stakeholders. Since stakeholders have share in the organisation, the organisation has to consider every decision to meet the stakeholder’s expectation. Stakeholder’s expectation includes high return on investment, power and authority, low risks on returns and decision making authority (Freeman, 2010). Explanation of definition with the help of key terms: After understanding the key terms presented in the definition, the definition provided by Johnson, Scholes and Whittington (2006) could be explained as “strategy is formulated in order to provide an organisation with clear understanding of its vision and mission. With the help of both these statement, an organisation could set its long-term objectives by identifying the internal capabilities with the external environment. Organisations that constantly meet the expectations of the stakeholders are said to be the ones that achieved success”. SWOT Analysis: SWOT analysis is one of the tools that are used by organisations to identify the internal capabilities as well as the external environment. An organisation identifies its internal capabilities by identifying its strengths and weaknesses (ST) and external environment with its opportunities and Threats (OT). Organisations that want to achieve its desired success, it must eliminate its weaknesses with the help of opportunities that lies ahead of the organisation and eliminates external threats with the help of internal strengths (Valentin, 2001). Evaluation of SWOT and its importance Evaluation of SWOT SWOT analysis has been criticised by (Baramuralikrishna and Dugger 1998; David 1997; Hill and Westbrook 1997; Wheelan and Hunger 1998) as this tool to analyse the internal as well as external environment is hastily conducted. According to them, the way this tool is conducted reduces proper communication and verification of all external and internal factors due to which the reliability of this tool gradually decreases (Leigh, 2006). In addition, SWOT creates confusion between achievement and strengths. This is another big critique for this analysis. This could be seen in Kotler’s (2003) strengths checklist where market-share leadership is listed in strength but actually it’s an achievement. According to Valentin, E. (2005) considering market share leadership as strength seems to be legit as organisations that are in such positions are doing something due to which they are at such positions. On the other hand regardless of criticism, many organisations are still using this tool in order to identify and evaluate the major elements in internal and external environment. Importance of SWOT It is critically important for an organisation to identify its internal and external environment in order to enhance its survival in the market. Some of the advantages that an organisation can capitalise upon by using this analysis tools are as follows (Coman & Ronen, 2009): Source of information This tool provides the organisation with required information regarding the internal and external environments which are later used in the strategic planning process. Enhancing organisation’s strengths By providing the organisation with its internal strengths and weaknesses, organisations work toward the elimination of weaknesses in order to improve the overall strengths. Capitalising Opportunities to revert weaknesses By availing opportunities an organisation reduces its weaknesses. This indicates that when an organisation capitalises upon opportunities that are available in the market, it somehow presents a chance to revert its weaknesses. Maximum response to avail opportunities This tool helps to identify opportunities that lay ahead of organisation. By providing such knowledge, an organisation enhances its performance in order to avail the opportunities before rivals. Overcome organisation’s threats As this tool provides the organisation with information regarding the threats, an organisation becomes aware of its threats. These threats are then overcome with the help of internal strengths. Role of SWOT SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. This analysis provides an organisation with information regarding its internal as well as external environment. The internal environment of an organisation comprises of its strengths and weaknesses whereas, the external environment provides the organisation with opportunities and threats that could potential harm the organisation to reach its desired goals and objectives (Panagiotou, 2003). Since SWOT analysis provides both the negative and positive factors that can influence the organisation success, an organisation prepares itself with its strengths and opportunities. This indicates that to reduce uncertainties and to remove threats, an organisation can rely on its internal strengths whereas; an organisation can eliminate its weaknesses with the help of its opportunities. In simpler words, SWOT analysis maximises the strengths and opportunities while minimising the weaknesses and threats of an organisation (Ghazinoory, Esmail Zadeh, & Memariani, 2007). The four factors that are critical in this method are as follows (Pickton & Wright, 1998): Strengths Strengths are the qualities of an organisation that leads to the accomplishment of its desired goals and objectives; mission statement. Strength is a positive factor of an organisation that provides an organization with consistency. The strengths may include expertise and experience, products of the company; new and current, high quality products, location and relation with the suppliers and distributors. Weaknesses These are the negative elements of an organisation that reduces the organisation’s probability to achieve its mission and eventually the full potential. These weaknesses have negative influence on the organisation’s success and growth. The weaknesses of an organisation may include lack of experience, awareness regarding company’s products, brand name recognition and high costs. Opportunities Opportunities exist within an environment in which the organisation operates. The opportunities enable the organisation to take advantage and to enhance its profit ratio in the market. For an organisation it is essential to take grasp the opportunities before any other competitor could take advantage of it. Some of the opportunities may include advancing technologies, improvement in market, acquisition of competitors, geographic expansion, and changes in regulations and policies. Threats These are the circumstances that jeopardise the organisation’s success and growth in the market. As this element is uncontrollable by the organisation, it could reduce the stability and make the survival of the organisation more difficult. The threats in the external market may include increasing numbers of competitors, increased costs, more strict regulations and alternative products. Strategic Priorities of SWOT The strategic priority of SWOT is to identify and evaluate the internal strengths and weaknesses along with external opportunities and threats. For an organisation to eliminate the internal weaknesses it could utilise the external opportunities and strengths for threats, respectively (Hill & Jones, 2007). Other Strategic Tools Some other strategic tools that are often used by organisations in order to identify environment that could influence the growth and success are as follows; PESTLE analysis This tool provides the organisation with big picture of Political, Economical, Socio-cultural, Technological, Legal and Environmental environment in which the organisation is operating. Since this tool focuses on the external environment, it helps an organisation to develop their vision for the upcoming years. This tool is considered critically important for organisations as it provides the organisations with information regarding the operations that are positively aligned with the factors of change. By doing so, an organisation can gradually take advantage of the change and achieve success in the market. In addition, this tool helps in avoiding those factors that could damage the organisation beyond control (Hunger & Wheelen, 2003). Each of the factor mentioned above are elaborated below: Political This factor includes; Regulation and de-regulation trends Government stability Type of government Changes in the political environment Tax policies and tariff control Economical As the name suggest, this factor focuses on the economical elements. Some of them are as follows; Economic growth Inflation rate Unemployment rate and labor supply Changes in the economical environment Impact of globalisation Socio-cultural This factor includes socio-cultural environment. Some of the major elements of this environment are; Population growth rate Age Health consciousness Lifestyle choices Attitude and behaviour of individuals Technological This factor focuses on the advancing technology. Some of the major elements of this factor are; Impact of technology Rate of technological change Awareness regarding automation Legal Some of the major elements are; Discrimination laws Consumer laws Employment laws Health and safety laws Environmental This factor is related to sustainable environment. Some of the major elements of this factor are; Climate change Level of CSR Porter’s 5 forces This is another simple tool that has helped organisations to achieve its desired success. As this tool provides an organisation to understand its strengths related to current position as well as the position that an organisation will move into. This tool provides organisation with information regarding where the power lies which ultimately helps an organisation to avoid taking wrong decisions (Grundy, 2006). According to this tool, there are 5 forces that determine power in a business situation. The forces are (Karagiannopoulos, Georgopoulos, & Nikolopoulos, 2005): Supplier power This power is related to supplier which indicates that supplier has the power to increase the level of price depending upon their strength. If the numbers of supplier available are greater in number, the prices would be lower and if, the numbers of suppliers are lower, the greater the prices charged. Buyer power This power is related to the number of buyers in the market. This power is again relies upon the number of buyers available that could influence the business. if an organisation has greater number of buyers, organisation has the power to dictate the terms whereas, if the number of buyer is few, the buyer dictates the terms to the organisation. Competition This power highly depends on the number and capability of the competitors available in the market. If the competitors provide equally attractive products to the customers then the power of the organisation will gradually decrease. On the other hand, if the organisation is able to provide the buyers with more attractive product than the competitors then the power will remain with the organisation. Alternatives available If an organisation provides its customers with a particular product and the competitor somehow provides the customers with substitute product, the power of the organisation would eventually weaken in the market. On the other hand, if the organisation has monopoly and there are no close substitutes available in the market, the power will remain with the organisation. Threat of new entry This last power is affected by the new entrant in the market that could weaken the market share of the organisation. In order to reduce the new entrants and to protect the power, an organisation must enhance the economies of scale as well as protect the key technologies. Critical success factors For an organisation to achieve its desired mission, goals and objective it must improve its performance. This tool helps an organisation with identifying the key areas that needs improvement in order to achieve organisational goals and objectives. This tool helps the organisation to pin point the areas of concern and provides information regarding the most important functions (Wheelen & Hunger, 2011). There are certain steps that the organisation needs to follow in order to identify the success factors of the organisation. These steps are (Thompson & Martin, 2005): Step 1) Establishing business mission and strategic goals Step 2) Evaluate the importance of each goal Step 3) Identify the success factors that could lead to achievement of goals Step 4) Measure each of the success factors Step 5) Effective communication of CSF with other important elements Step 6) Continuous monitoring and re-evaluation to ensure progress Strengths and Weaknesses of SWOT Strengths of SWOT This tool allows an organisation to evaluate the internal and external environment and provides an organisation with an overview regarding what needs to be done in order to eliminate the weaknesses and threats is the major strength of the SWOT (Glaister & Falshaw, 1999). Weaknesses of SWOT Since this tool requires less time and communication, some of the major factors could be overlooked. This could lead the organisation open for threats and the survival and growth of the organisation might tremble (Hussey, 2002). Recommendations for Managers For a marketing manager, it is essential to keep informed regarding the current situation of the market as well as about the competitors and their products (Wilson & Gilligan, 2012). Some recommendations for the marketing manager are as follows; Continuous research in order to identify external opportunities. The marketing manager should be informed regarding current and potential customers. Marketing manager should develop marketing strategy and plan in order to attract customers with eye-catching products. The marketing manager should also be responsible for the management of marketing mix. The marketing manager should engage customers and create relationship with the customers. Conclusion For an organisation to be successful in the constantly changing environment, it is critically important to devise strategies that should aim to provide the organisation and the stakeholders with profit along with success. For doing so, organisation should consider the vision and mission statement in order to develop goals and objectives; short-term as well as long-term, so that the organisation could accomplish its desired goals and objectives. For an organisation to devise strategies, it has certain analysis tools that help to identify internal environment and external environment. SWOT analysis is an example of such tool. This tool provides the organisation with an overview of the internal strengths and weaknesses along with external opportunities and threats. Some other tools include PESTLE analysis, Porter’s 5 force and Critical success factors. List of References AMA. (2013). Marketing management by AMA. Available from http://www.marketingpower.com/aboutama/pages/ama%20publications/ama%20magazines/marketing%20management/marketingmanagement.aspx [Accessed 24 January 2013] Baramuralikrishna, R., and Dugger, J. (1998). 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