The Importance of Marketing to Organisations in the Twenty First Century - Essay Example

THE IMPORTANCE OF MARKETING TO ORGANISATIONS IN THE TWENTY FIRST CENTURY A Case Study of Hutchison Whampoa Limited – 3G Mobile Service UK By Dadabhoy Dated May 3, 2007 Contents The Importance of Marketing to Organisations in the Twenty First Century 3 Introduction 3 Definition of Marketing 3 Evolution of Marketing 4 Integrated Marketing 5 Introduction to the Case Study Organisation 5 Marketing and its Importance for a Company 6 Product Development 7 Pricing 7 Importance of Marketing for 3G 7 Marketing Strategies 8 Differentiation 8 Cost Leadership 8 Focus Strategy 8 3G’s Approach to Marketing Strategy 9 Marketing Mix Strategies 10 Product 10 Price 11 Promotion 12 Distribution 13 Trends in Modern Marketing 14 Conclusion 16 Personal Statement 17 Works Cited 19 The Importance of Marketing to Organisations in the Twenty First Century Introduction Marketing dates back to the ancient times when people used to barter things in exchange of other products or services. Since then, the concept has evolved to a great extent and in present era, and certainly for the ages to come, the importance of marketing can not be negated or underestimated. It has become the life blood of an organisation in terms of enabling the business to function in this extremely competitive environment of modern day world. Marketing virtually affects all areas of the organisation’s operations through a concept called integrated marketing. Definition of Marketing Marketing has been defined differently by various authors. As per Eztel, Walker and Stanton (2003), ‘Marketing is a total system of business activities designed to plan, price, promote, and distribute want-satisfying products to target markets in order to achieve organisational objectives’. On the other hand, Kotler (2003) defines marketing as ‘a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with each others’. These two definitions provide significant insight into the main operations of marketing, vis-à-vis planning, pricing, promotion and distribution. The American Marketing Association provides another definition of marketing as ‘the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisational goals’ (Bennett, 1995). Evolution of Marketing There are three main eras through which marketing has evolved as a revolutionary concept and has taken its current form. These include product orientation period (Eztel, Walker and Stanton, 2003) in which demand were greater than supply, manufacturing and production were limited and industries were not fully developed or capable to take care of the needs of the market. In this period, the main focus of the companies were on producing large quantities of products to satisfy the ever more increasing wants and needs of the target market. Little, if at all, efforts were used to be put in the marketing of products through searching the customers. This was followed by sale orientation stage (Eztel, Walker and Stanton, 2003). In this period, customers used to have relatively lower purchasing power, hence companies began hard selling through overly aggressive advertising and heavy reliance on promotional activities. In the post world war II era of 1950s and onwards, market orientation has emerged as the de facto method for organisations. As per the market orientation technique, ‘companies identify what the customers want, and tailor all the activities of the firm to satisfy those needs as efficiently as possible’ (Eztel, Walker and Stanton, 2003). The marketing concept emphasises on customer orientation and co-ordination of marketing activities to achieve the organisation’s performance objectives. This requires identification of customers’ specific needs and fulfillment of these needs through well designed products and services. Integrated Marketing As Kotler (2003) defines it, integrated marketing is ‘when all the company’s departments work together to service the customers’ interests’. Integrated marketing works at two broad levels in an organisation. Firstly, it attempt to co-ordinate the efforts of various marketing functions like sales, advertising, customer services, product development and management and market research. Secondly, it extends beyond the organisation’s marketing department to other areas like human resources, finances, supply chain, production and information systems, such that all employees, managers and process owner should think customer. Eztel, Walker and Stanton (2003) have quoted David Packard of Hewlett-Packard saying ‘Marketing is far too important to be left only to the marketing department!’ (David Packard) This shows the importance of an integrated and cohesive approach to marketing both internal and external to the organisation. The internal marketing is carried out for purposes like getting an idea, product or service accepted by peers and senior management, or to obtain required resources under constrained environment; whereas external marketing is to potential customers. All units of an organisation need to work together as a cohesive whole in order to provide the needed synergy for achieving corporate marketing goals and objectives. Introduction to the Case Study Organisation The organisation chosen for the case study is Hutchison Whampoa Limited – 3G mobile service UK. Hutchison Whampoa Limited is an international corporation having many diversified businesses including port operations, retail, property development and infrastructure, technology, and telecommunication operations (3G.Co.UK, 2007). 3G Mobile Services is a mobile media company that operates from United Kingdom. Some of the services that the company provides include (Hutchison Whampoa Limited. 2003): Person to Person Video Calls – Mobile video calls can be made using 3G’s technology Entertainment – The company offers interactive music, postcards, interactive games and online ticket booking facilities to its customers. News and Information – Weather and sport news are provided, usually free of cost, to the customers. Business and M-Commerce – Using ‘electronic wallet’ concept that 3G has pioneered, customers can make financial transactions using their mobile phones. Global Positioning – 3G mobiles are equipped with global positioning for field navigation and other purposes. Marketing and its Importance for a Company With the advent of technology, the world has truly become a global village, where everybody has access to every piece of information that is generated anywhere in the world. This has also impacted the way businesses are carried out. Now, more than ever before, there are requirements for companies to get themselves known and liked by potential market customers, in order to operate in the market. Target Market The target market where the company will operate and the customers to target pose significant insights into the demographics, market structure and other parameters and marketing team or function is responsible to analyse these conditions. Product Development Companies can access the market and capitalise on the endless opportunities only if these companies can understand the exact requirements of the target customers and modify their products and services accordingly. Pricing In addition to product and services development, the companies need to decide on the pricing of their products and services. The right price may spur the sales but too high or too low a price will definitely affect the company negatively. Pricing is a critical decision and hence can only be taken if exact market information is available. This decision has far reaching effects. Importance of Marketing for 3G 3G has chosen United Kingdom as its primary target market mainly because of the expertise and experience to operate in this region and the huge inroads that the compay is able to create inside the big UK market for mobile communications. Being a mobile media company, it is critical for 3G to develop its products and services focusing on the specific requirements that UK customers have. Marketing Strategies There are three main marketing strategies that businesses pursue in order to obtain maximum share of the target market. These include differentiation strategy, cost leadership and focus strategy. Differentiation Product or service differentiation refers to creation of a product or a service that is unique. This uniqueness is the main differentiator for the product from its competitors. Companies having a differentiated and unique product or service are able to generate more revenue in terms of sales. Cost Leadership Some companies compete on low costs. As a general rule, considering all else is equal, the company that provides a product at a lower rate is preferred by customers. Hence, the cost leadership model is concerned with developing sound systems and processes such that the company is able to provide products or services at the least cost in the market. Focus Strategy This strategy is concerned with providing personalised services like customer support and assistance on timely basis and to the satisfaction of the customers. In today’s markets, customers want themselves to be treated with care, to be responded quickly and timely and to be respected. Companies that are able to achieve customer focus are also able to achieve high customer base and high customer loyalty. 3G’s Approach to Marketing Strategy 3G has adopted a predominantly differentiation approach towards marketing. However, the other two marketing strategies discussed above are also followed. The company has offered some of the thinnest mobile phones in industry including Motorolla V3 Razor and LG U880 which is the first handset with integrated antenna by LG. In addition, the company offers some of the most demanded packages for mobile use at the cheapest rates. This includes ‘Pay Monthly’ package which cost only £15 per month and the company provides eBay, weather news, sports news, and Windows live messenger for free. Using these extremely low cost and high features’ solutions, the company is able to attract and retain a large customer base. In addition to these low rate solutions, the company has initiated several campaigns where 3G provides mobile phones to customers free of charge on the purchase of specific programs and packages. This reduces the costs that the customers have to bear and hence attract a high response from existing as well as potential new customers. 3G offers 24 hours customer support and help both through telephone and internet. This is provided to give quick responses to customers’ queries with utmost care and responsibility. The employees at the company are trained to provide customer centric services by developing a customer oriented culture in the company. Marketing Mix Strategies In addition to the marketing strategies as identified above, the marketing mix strategies provide a comprehensive set of strategies which relate to four critical areas of marketing namely, product, price, distribution, and promotion. Product Strategies are developed to decide which products to introduce, managing and upgrading existing products and services as per market demands and eliminating those products and services which are no longer able to attract customers and perform business up to the required levels. This also deals with ‘strategic decisions regarding branding, packaging and other product features like warranties’ (Eztel, Walker and Stanton, 2005). In addition, a different set of strategies is required for various phases of a product life cycle. During its lifetime, a product passes through the introduction, growth, maturity and decline phases (Kotler, 2003) and each requires careful analysis and development of direction that the company wants to take to achieve business objectives. 3G has enhanced its products and services a great deal since its inception. There are a number of value added products and services that the company provides. These include, but are not limited to television and radio broadcasts on mobiles, in addition to providing internet and web surfing features. Different packages have been developed for customers in various categories for ease of use, economy and optimal gains. These product development and management policies are working well for 3G and providing huge dividends to company and its management. Price The pricing strategy is the key to success of any business. After all, it is the price element that dictates the revenues that company will generate. The entire expenses and developmental efforts that companies carry out are targeted to earn high revenues; and are charged to the revenue itself. Pricing strategies are many, and their usage depends upon the situational analyses. Companies can use price skimming strategy which refers to offering products and services at a premium price in the market, in order to avail the first mover advantage of an innovative idea and/ or product design; or price penetration strategy to provide the products at lower prices than competitors to achieve volume sales. Setting the price is a function of a number of variables including product quality, service efficiency, target market characteristics, and customers’ perceived value with the products. However, the pricing exercise has to be controlled through clear and concise pricing objectives. A company must be aware of its long term goals and objectives while arriving at the target price for its products. Sometimes, prices vary as per differences in geographical locations and other factors. This is carried out due to the differences in shipping costs in various areas in the target market. In addition to the above, companies adopt product bundling prices for its bundled products. For example, in case of 3G, the company provides bundled products by selling mobile phones with internet service, free news and live messenger support. 3G, in return, is compensated due to high demand and customer preferences for such bundled services. A customer who purchases a mobile from 3G can enjoy all other bundled benefits in one package. Another very popular bundled pricing offer by the company is to offer a free Nokia E65 mobile for purchasing X-Series Gold package (Three.Co.UK, 2007). Another pricing tactic used by 3G is a two part pricing for its mobiles. This is when 3G charges a fixed line rent for ‘Pay as You Go’ service and charges 5p per minute for outgoing calls (Three.Co.UK, 2007). These and many other pricing strategies allow the company not only to gain customer base from different classes of users; but also provides a useful analysis tool to identify the strategy that works best for UK mobile services industry. Promotion Mostly confused with the only area of marketing, promotion is perhaps the soul of the entire marketing effort. The main purpose of the entire promotion mix is to get the product and its features to customers so that they get inclined to purchase it. Promotion mix consists of various forms like advertising, direct selling, public relation and others. Direct selling is the ‘personal presentation of the product to a prospective customer by a representative of the organistion selling it’ (Eztel, Walker and Stanton, 2005). Direct selling is treated as one important form of product promotion as the sales representative for the company is on the spot to resolve customers’ queries and/ or apprehension regarding the use of the product or service. It can be carried out over phone, can be face to face meeting or targeted letters. Advertising is a form of impersonal communication which is carried out through a third party like television, radio, billboards and other outdoor mechanism. Advertising is targeted to a mass market and hence, should be carefully developed to take into account various aspects of human nature and preferences. Since there is lack of control over the advertising message’s interpretation in potential customers’ minds, advertisements have to be properly planned and well executed. 3G utilises a host of channels to carry out its advertising campaigns suited to various types and classes of customers. It has developed an attractive set of websites to provide detailed information about its products, services, features and packages. In addition, it also undertakes outdoor advertising and has posted messages on various billboards. In today’s world, the impact that television has on people’s lives can not be ignored. The company is fully aware of it and has developed a number of successful TV advertisement campaigns to tap general public. Public relations, through news and third party comments about a company’s products and services provide an independent and bias-free appraisal of the company to customers and general public. An independent remark by someone not related to the company is given higher weight by customers than a similar remark by one of the company’s representatives. 3G’s products are well commended by all. There has been quite a bit written about the new and uniquely styled mobile phones that the company promotes, in addition to the service packages; which is also provided on the company’s website (Three.Co.UK, 2007). Hence, the company is performing well in this area as well. Distribution A company may have the best product and a high demand in market for its products, yet it can not take the benefit of such high demand if it is unable to provide the product to customers at the right time with the desired efficiency. This is where the function of distribution comes into play. Distribution can be accomplished through a number of channels. These might include direct sales from producer to customers; selling through an intermediary like a wholesaler; or utilising the services of value added distributors as intermediaries or agents of the principal producer. 3G utilises direct sales through the company owned outlets in various parts of the country. In addition, various franchises have been arranged to enhance the reach in areas where 3G does not operate. These franchisees sell 3G’s products and services to customers on the company’s behalf. These are known as ‘Retail Partners’ in 3G terminology (Three.Co.UK, 2007). The importance of the right marketing mix is undeniable as this forms the core of the entire marketing function in a company. 3G has been up to the task in determining the needs, and developing a huge marketing mix with a well known brand name for its products and services in not only UK, but other parts of the world as well through its international ventures. The company has been a dynamic entity, thoroughly aware of the market dynamics in which it operates and has been successful in capturing a high market share for its products and services. Trends in Modern Marketing The field of marketing is continuously evolving and this trend is likely to continue in the foreseeable future. Internet has opened up new and novel ways for both customers and producers. As Kamei (2000) in ‘A 21st Century Approach to Marketing’, ‘because information is becoming more readily available as the internet is increasingly used to send and receive it, consumers are becoming more homogenous and passive’. Companies, hence, need to reconsider their marketing strategies in relation to fast changing market outlook. Technology, especially internet has made a huge impact on people’s lives. It has also posed significant competition for companies who are now facing stiff challenges from competitors operating from a distance of thousands of miles. There is an increasing requirement for developing lean systems to reduce costs, so that expenditure can be undertaken on technology for better promotion, advertisement and greater reach. Shrewd companies turn this seemingly difficult challenge posed by technology, into opportunity by making suitable strategies to tap the untapped markets operating in other countries and regions through internet. In addition to technology, another glaring development in this era is that of changes in how social policy and environment safety by a company is viewed by customers and general public. An increasing stress has been made on companies to develop environment friendly products and services. 3G, being a responsible mobile media company, has responded to the environmental health and safety issues. Company has set up a team of regional community affairs managers to work with local teams for resolving community issues and actively participate in community affairs (Three.Co.UK, 2007). There were some concerns on 3Gs base stations near residential areas and their negative affects on people’s lives. However, company has adopted the international scientific standards and best practices to ensure that no compromise is made on public’s health and safety, and reduces the microwaves emission that might cause health and environment hazards. The effort has been praised by World Health Organisation (WHO) and is also approved by The Independent Expert Group on Mobile Phones (IEGMP) (Three.Co.UK, 2007). Conclusion Marketing is one of the most critical functions of any organistion. It should be carried out in a focused, well planned and appropriately executed fashion. All marketing efforts should be govern by the company’s objectives. The identification of suitable target market should be made after thorough analysis of market dynamics and factors that impact a particular market. Appropriate marketing strategies and execution framework provides opportunity to obtain larger market share in existing markets, identify new markets and customers’ needs and adapt to the changing market scenarios. However, care should be taken to develop plans which are consistent with the company’s vision and mission statements, and conform to long term objectives of the organisation. In addition, the companies must continually strive to bring about changes in its marketing tactics, and should be focused to customers. This could be the recipe for a successful company having a successful marketing function. Personal Statement The report has provided an insight into the core areas of marketing function that must be addressed appropriately to develop a successful marketing strategy fully capable to lead the organisation towards the road to success. In addition, the case study has enabled me to explore the ways of business and market research for a company, to identify the real life marketing efforts of the company and their results. The report allowed me to map the theoretical concepts studied in academics with a practical implementation, for 3G, that assisted in refinement of the concepts. A better approach that could have resulted in achieving better results regarding the company, could have involved visits and interviews with 3G’s management and marketing executives. This would have provided a first hand knowledge of the company’s marketing functions and strategies, and could have resulted into a better analysis for the case study. However, the work carried out to develop this report has been carefully developed to apply theoretical concepts to practical implementations in a real life company. The marketing mix study of the company and its mapping to theory provided a complete understanding of what could have been done, and what is the reality as far as the company’s systems and practices are concerned. These sorts of reports should be developed frequently to enable the students to gain an insight into real businesses, having to face real challenges and developing real marketing strategies. In addition, it allows review of the impact that these decisions and marketing strategies have on the performance of the company, ultimately affecting its bottom line. In the end, it must be said that the experience of studying the theory and observing its implementation in a real life company like 3G has been an interesting and informative one. It also assisted in resolution of some confusing concepts like whether it is necessary to adopt just one particular approach for marketing like one of differentiation, cost leadership or focus strategy. As learnt from the research work for 3G that, a company can carry out as much experimentation as it wants, without sticking to the theoretical concepts. All the theories that have been developed about marketing are adopted from the practical implementations that somebody somewhere did. This also means that the field of marketing is not like a scientific area with predetermined results for predetermined procedures; yet it requires a sort of trial and error and learn from experience temperament from organisation’s marketing management in order to find out which policies work best for the given industry in the given environment and operating under a given set of market forces. This is indeed an interesting, yet intriguing concept and should be implemented in real life companies for their strategic marketing efforts. Works Cited Bennett, D. P. Dictionary of Marketing Terms. 2nd Edition. Chicago: American Marketing Association, 1995. Eztel, J. M., Walker, J. B., Stanton, J. W. Marketing. 13th Edition. Ohio: McGraw Hill, 2003. “H3G: What is 3G.” Hutchison Whampoa Limited. 2003. 30 April 2007 . Kamei, T. A 21st Century Approach to Marketing. Nomura Research Institute, 2000. Kotler, P. Marketing Management. 11th Edition. New Jersey: Prentice Hall, 2003. “3 – Price Plans.” Three.Co.UK. 29 April 2007 . “3 – Company Site: Media Centre.” Three.Co.UK. 1 May 2007 . “3 – Company Site: Retail Partner Centre.” Three.Co.UK. 1 May 2007 . “3 – Company Site: Our Approach Overview.” Three.Co.UK. 2 May 2007 . “3 – Company Site: Our Approach Health.” Three.Co.UK. 2 May 2007 . Read More