The Strategic Role of Marketing - Essay Example

MBA: Strategic Marketing Submitted by: XXXXXXXX Number: XXXXXX of XXXXXX XXXXXX XXXXXX XXXXX Date of Submission: XX – XX – 2009 Table of Contents MBA: Strategic Marketing 1 Submitted by: XXXXXXXX 1 Student Number: XXXXXX 1 University of XXXXXX 1 Tutor’s Name: XXXXXX 1 Subject: XXXXXX 1 Subject Code: XXXXX 1 Date of Submission: XX – XX – 2009 1 Table of Contents 2 The Strategic Role of Marketing, Both in Fact and Theory: 3 The Relevance of the Marketing Concept to All Sectors: 5 The Impact on Traditional Marketing Approaches of Changes in the Business, Social and Physical Environments: 9 The Marketing Planning Process And How It Shapes Strategy And The Development Of Targeted Marketing Mixes: 11 Bibliography 15 Appendix 18 Over the years there have been a number of changes and improvements in almost every field. Marketing has also developed and improved over the years to suit the current requirements of the market. This paper will deal with answering a very important question about marketing. Marketing has seen numerous changes from the past and has now evolved to become a strategic panacea. It used to be considered as focused to sales and advertising and now has in a number of ways become the central focus for every company irrespective of the nature of the industry and the how it has grown to become a customer centric focused activity. The Strategic Role of Marketing, Both in Fact and Theory: As has been noted marketing has been defined as a function that is responsible for the identification and anticipating the needs of customers and yet being profitable. Marketing involves a number of techniques like research, product design, development, and the four P’s i.e. price, product, promotion and place. It also involves elements like public relations, distributions and after sales services. Together these form the marketing mix. As explained by Doyle (2000), ‘marketing is the management process that seeks to maximize returns to shareholders by creating a competitive advantage in providing, communicating and delivering value to customers thereby developing a long-term relationship with them’ (Wiley, 2009). The marketing contribution in an organization lies in the formulation of the strategies and to a great extent on the right choice of customers, relationship building in terms of trust and also the competitive advantage. Strategic marketing is not only the internal integration but also a focus on the external choices of how the company can meet and address the needs of its customers in the current overly competitive environment. Strategically, the marketing techniques used within a company play a major role in the overall success. The impact of the strategic marketing can allow the companies to use the resources very effectively as well as to ensure reduced costs for the company. Strategically planning the marketing efforts of the company allows the company to work effectively in terms of the finances and the other processes of the company as well. In the previous times, marketing simply dealt with the sales and advertising and these were the only aspects that were related to marketing in the earlier days. However as time has passed and with the extension of the knowledge and reach of marketing it now have five main elements, these include: a) Ensuring the organization plans remain active, b) how to reach the goals, c) how to be successful in the marketplace, d) the speed, and the sequence of the steps to be taken and e) how to achieve higher levels of profits (Hambrick and Fredrickson 2001, p. 50). It is essential that the companies are aware of the issues that the customers solve using the products and services of the company. One of the best ways to understand this is from the fact that in the present day marketers use several techniques like SWOT analysis, PESTLE analysis, Porter’s Five Forces and many other analysis which allow the organization to get a fair idea of where it stands and the external factors that affect the company not only in terms of marketing but also in terms of the strategies that are developed within the organizations. The relevance of the above mentioned marketing concepts will be discussed in the next section. According to the American Marketing Association, marketing has been defined as, ‘Marketing (Management) is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals’ (Rao, 2009). ‘Marketing is a philosophy that leads to the process by which organizations, groups and individuals obtain what they need and want by identifying value, providing it, communicating it and delivering it to others’(Wiley, 2009). The main focus of marketing has always been the needs of the customers, the products, exchange, relationship and the communication (Blythe, 2006, p. 29). There is a strategic relationship between the marketing and the long term direction of companies. This allows the companies to gain a competitive advantage over its competition and also assists the organization to meet the needs of its customers and the stakeholders. As discussed, marketing has a strategic role that it plays in every organization (Kotler, 2002, PP. 15 - 18 , 26-36). The Relevance of the Marketing Concept to All Sectors: As seen in the previous section, it is clear that there are several new techniques that have been developed to assist the companies develop strong and well designed strategies and marketing plan. Every sector is provided with an immense assistance with the marketing concepts and these can assist the companies understand the markets that they currently work in and the various elements that not only affect the marketing and sales of the company but also the overall working of the company. Marketing has evolved over the years and as discussed earlier numerous authors have included several theories that can be used for the marketing process. These theories as discussed briefly include the PESTLE analysis, Porter’s Five Force Analysis, SWOT analysis and many more. Here in this section a brief overview of these theories will be discussed. In order to gain an understanding of the various techniques: a) Porter’s Five Forces: Michael Porter has devised a framework which provides a better understanding of the industry and how companies can be affected by forces within the markets. The five forces that he has described are: a) Threat of new entrants, b) Determinant of buying power, c) Threat of substitutes, d) Determinants of supplier power, and e) Rivalry among the firms. This allows a focused and better analysis of the external factors of the industry. Each of the five factors allow the organisations to get a better idea of the factors that impact the company and the steps that can be taken by the organisation to help develop successful plans for strategic marketing. The diagram below provides a clear idea of the relationship of each of these five factors to a business. b) PEST Analysis: This analysis is to provide for a better understanding of the major external elements that affect the performance of a company. This highlights the major elements like the political, economical, social and also the technological factors that can cause any affect to the company’s performance. Each of the four factors has a direct or indirect effect on the businesses depending on the nature of the business. It is essential that businesses take these factors into account while deciding the strategies as well as marketing plan for the business (Needle, 2004, pp. 11 - 20). c) SWOT Analysis: This is an internal analysis of the company and here the company can access the strengths, weaknesses, opportunities and threats of the company. This method allows the company to recognise its strengths, and weaknesses and to use its strengths to give the customers a stronger image of the company (Kotler & Armstrong, 2007). This also allows the company to access the threats and opportunities that it faces and to use this as a chance to work towards gaining the opportunities and making them the companies strengths and to work towards fighting against the threats that the company faces. d) SMART Objectives: In recent times companies adopt a newer methods recognised as SMART Objectives. Here the companies unlike the earlier years base their objectives on five main elements, these include, Specific, Measurable, Achievable, Relevant, and Time Based. Each of these allow to ensure that the objectives set down by the company are doable and are measurable to ensure that the company moves towards its goals, missions and vision (Kotler & Armstrong, 2007). e) DAGMAR: This refers to defining the advertising goals for measures advertising results. This is a more recent method where the companies adopt a mode to ensure that the advertising is not only creating sales but is reaching out to right audiences. f) Marketing Mix, Positioning and Segmentation: In the recent times, the companies focus much more on the options like marketing mix, positioning of the product in the markets, segmentation and all of these add up to the marketing efforts of the company. Here the companies use these factors to target the right audiences from the right segments and also ensure that the products are positioned in the markets in an accurate manner (Kotler & Armstrong, 2007). Similar to the above discussed theories there have been several others that have been developed to help ensure that the businesses increase their revenues using the marketing efforts. In the earlier times the main objective of any marketing activity was sales and advertising. However as seen in the above discussion, the marketing has evolved to a great extent over the years. The current techniques that are available are useful not only for profit making organisations but also for non profit making organisations alike. An Evaluation: Considering how the changes in the marketing efforts are helpful for the companies, it is clear that companies are able to develop a better understanding of themselves using the various techniques which allows them to portray an image to the outside world as well. The newer techniques allow the companies to base all the objectives of marketing on fixed and measurable parameters unlike simply advertising for products without ensuring that the right target markets are reached. This is a more focused and well groomed method to be followed by companies and these allow the companies to use their resources to create a brand, brand image and brand equity. Brand Equity has been defined as ‘the brands assets (or liabilities) linked to a brand’s name and symbol that add to (or subtract from) a product or service’ (Aaker and Joachimsthaler, 2000. p.17). There has been a lot of research that has been conducted on the importance of brand equity as it has been recognised to help improve the profitability of the brand choice and also leading to other benefits like brand loyalty and acting as a protection from the threats of competitors (Bridges, Keller & Sood, 2000). Aaker also went on to divide and categorise this into the following categories of Brand Awareness, Perceived Quality, Brand Association and Brand Loyalty. Hence irrespective of whether a company is a profit based organisation or if it is a non profit based organisation the brand name, image, perception and equity allows the company to not only increase the sales but also increase the overall effectiveness of the organisations as well. The Impact on Traditional Marketing Approaches of Changes in the Business, Social and Physical Environments: Traditional marketing has been recognized to be more company focused and product based rather than the new marketing techniques which are more customer focused and driven. The traditional marketers focused too much on portraying a message that the focus was only on the company and not so much on the customers (Hambrick and Fredrickson, 2001). There were set theories that the marketers follow and the marketers using the traditional marketing have been noted to concentrate of the 4 P’s of marketing for the development of their unique selling proposition. However with the fast changing world and the growing and changing needs of the customers the companies cannot be focused on the unique selling proposition anymore (Doyle, 2000). With the changes in social and physical environments, and the fast changing and pacing world, there is a high need for every business to take up and follow the trends in the markets. In terms of traditional marketing in these contexts, it is clear that it is not as effective and efficient as it used to be in the earlier years (Doole and Lowe, 2004, p. 53). This is simply because the change in needs and requirements of the customers. Also like in the earlier days, where brand recall was an important factor, this is not so much of an essential factor as the customers are being provided with numerous brands each day (Kotler and Lee, 2006). Also in the present day with the high levels of competition, it is seen that every brand is as good as the others that are available in the markets and this leaves the customers with a variety of choice. This thereby leaves the marketers with a need to use 360 – degree marketing which simply means that the markets need to cover all the modes and areas for the brand recall. Considering the traditional marketing methods, they do not have a very big impact on the working of companies (Kotler and Lee, 2005). However in a survey that was conducted in 2005, by Harris Interactive and Public Relations Society of America, it was noted that traditional marketing was the best method and a reputed marketer also made a statements which reads, ‘Traditional Marketing helps because people still view them’ (Blackwell, 2006). Though there have been several arguments where marketers believe that traditional marketing cannot cope with the fast changing environment and the ever changing customer needs, it has also been noted that almost every marketing plan that are prepared are based on the traditional marketing however with a few newer techniques like online marketing and other technologically improved marketing techniques as well (McDonald, 2006, p. 5 - 8). The Marketing Planning Process And How It Shapes Strategy And The Development Of Targeted Marketing Mixes: For years now researchers have argued that the most successful firms need to be market oriented and that the focus is most essentially to be placed on the needs of the customer and the satisfaction of the essential factors. It has also been studied by several authors that companies that are successful and perform well tend to follow four important elements, a) high levels of marketing orientation, b) open organization climate, c) a corporate culture that is externally focused and d) innovations. It has also been noted that organization’s market orientation and the corporate culture followed have a major impact on the overall performance of the firm as well. As explained by Blotnicky, 2009, ‘Jaworski and Kohli indicated that there are external constraints to the adoption of the marketing orientation. Such constraints involve market or economic situations, which make it difficult for firms to adopt the marketing concept even if they are willing to do so. The competitive nature of the industry, the amount of power that the consumer has over the purchase process and the degree of market growth were constraining factors. The easier it is for competitors to enter the market, the greater the market volatility, and firms may be more likely to do proactive research and adopt a marketing orientation. As buyers gain more control over the purchase process (as has happened with the Internet and other direct selling tools) the more important market intelligence becomes and the more market-oriented firms are likely to become’ (Blotnicky, 2009). Based on the American Marketing Association’s definition of marketing, Whittaker has defined a marketing plan as, ‘a marketing plan establishes a way to achieve this in relation to the companys overall objectives’. She also goes on to explain, ‘the marketing plan plays a vital role in achieving the success for a business strategy since most business ultimately want to continue doing business and a marketing plan determines not only how to remain in the game but keep a competitive edge’ (Whittaker, 2009). The marketing planning process is very similar to any other planning process of the company. It provides the company with a clear direction and it has a positive effect on the overall strategy of a company. A well developed and implemented marketing plan will assist the company develop and be successful on an overall basis (Wilson and Gilligan, 2003, 25 - 26). As the main purpose of any business plan is to create a direction for the company, the marketing plan on the other hand assists the company achieve its goals and also provides a support to the business plan. Over the years the marketing of a company has developed to a great extent and the marketing plans on the other hand serve as a business strategy to assist the company retain existing customers, increasing the customer loyalty, generating profits, exploring new opportunities, and also expanding the market share for the business. The overall impact of the plan on the strategy of the business is directly related to the success rate of the marketing plan (Palmer, 2005, pp. 17 - 24). The marketing plan has also been recognised to act as a benchmark for any further evaluations of the company and this becomes a very important resource for the company to gain a clear perspective of the various strategies that have worked that those that have not while planning for the future (Kotler & Armstrong, 2007). As has been understood, the main purpose of a marketing planning process is to perform the situation analysis, formulation of the basic assumptions, laying down the objectives of what is being sold and to whom it is being sold, costing and scheduling the actions that are required for any implementations and to reach the goals, and lastly include planning of how the objectives will be achieved (Kotler, 2007, pp. 36-78). The marketing plan establishes how the business strategies will be achieved and how the business can achieve the specific strategies based on extensive research, situational analysis, competitive analysis, and also any other aspect of the business like the competitive advantage (Thompson and Martin, 2005, pp. 25 - 28). The business planning process involves the use of several theories that assist the companies grow and develop to become successful. A few of the various theories that are used in the planning process include BCG Strategic environment matrix, which is based on the product life cycle theory. This provides a means to correctly give importance to the product portfolio of a business unit. Stars, refers to businesses use huge amounts of cash and also generate large amounts of monies as well (Kotler & Armstrong, 2007). Here the company has a high growth as well as high market share. Cash Cows, this is where the investments are low and the growth is also low, however the profits and cash generation should be high. Dogs are companies which are low in growth as well as market share. These companies are in a state of almost liquidity. The last group is the Question Marks, are companies with high growth but low market shares. Similarly there are several other theories that are applied to help companies develop and participate in the markets and to create a competitive advantage. Although these form a major part of the strategy of a company as well these play a major role in the process of marketing of the company as well (Kotler & Armstrong, 2007). In conclusion it can be said that with the constantly changing environment and the several differences in the needs of customers the strategies and the outlook of businesses have also changed to a great extent. Marketing now has become a more personalised and customer centric process of a company rather than simply being a sales and advertising process (Blythe, 2006, p. 25). A few of the process that make marketing a strategic panacea for every business include, that marketing should deal with, a) Make the customers feel that they are unique and make them realize that they are valuable to the service provider/ product, b) The queries and issues must be resolved promptly and in a friendly manner, c) Personalization should be given importance and database marketing has to be utilized to its fullest potential in providing personalized services, d) Information system should be customer centric and CRM applications should help the service provider / company to identify the most valuable customers, e) Identify the customers who are likely to switch, conduct a root cause analysis and make an effort to retain the customers by coming up with better offers and pricing plans for them, and f) Provide considerable support and information regarding the handset usage and functionalities (Kent, 2007, pp. 11 - 13). With so many elements marketing is slowly become an essential process of the business and is an underlying factor for the success of the business as well. Bibliography Aaker, D. A., & Joachimsthaler, E. (2000). Brand Leadership: The Next Level of the Brand Revolution. Free Press. Blackwell, J, (2006), Overview of Traditional Marketing, 1st December 2006, Accessed on 17th November 2009, Retrieved from http://ezinearticles.com/?Overview-of-Traditional-Marketing&id=374128 Blotnicky, K.A. (2009), ‘The Relevance of the Marketing Concept’, The Workplace Review, February 2009, Accessed on 18th November 2009, Retrieved from http://www.smu.ca/academic/sobey/workplacereview/feb2009/feb_marketing.pdf Blythe J (2006) Principles & Practice of Marketing 1e, Thompson. 25 – 36. London (Biz-Ed) Bridges, S., Keller, K. L., & Sood, S. (2000). Communication strategies for brand extensions: enhancing perceived fit by establishing explanatory links. 29 (4, p1 - 11). Doole, I. and Lowe, R. (2004) Strategic Marketing Decisions. Thompson.39 – 54. London (Biz-Ed) Doyle, Peter (2000), ‘Valuing marketing’s contribution’, European Management Journal, 18 (3), 233–45. Hambrick, Donald C. and Fredrickson, James W. (2001), ‘Are you sure you have a strategy?’, Academy of Management Executive, 15 (4), 48–59 Kent, R (2007), Marketing Research: Cengage, Florence KY. 11 – 13. (Biz-Ed) Kotler, P. and Lee, N (2005) Corporate Social Responsibility: Pearson, 211 – 226. London (e-book) Kotler, P. and Lee, N (2006) Marketing in the Public Sector: Wiley, 154 – 167. Hoboken NJ (e-book) Kotler, P. Armstrong, G. (2007) Principles of Marketing. FT Prentice Hall. 36 – 78. London. (e-book) Kotler, Philip (2002), Marketing Management: Analysis Planning and Control (8th edn). Englewood Cliffs, 15 – 18, 26 – 36. NJ: Prentice Hall. McDonald, M (2006) Marketing Plans 6e: Elsevier, 5 – 8. London (e-book) Needle D (2004) Business in Context 4e Thompson. London (Biz-Ed) Nicholls, A , Opal, C (2005) Fair Trade: Market-Driven Ethical Consumption, 11 – 20. Sage (e-book). Palmer, A. (2005) Principles of Services Marketing. McGraw-Hill. 17 – 24. London. Rao, N., (2009), ‘The Marketing Concept - Kotler’, 19th September 2009, Accessed on 14th November 2009, Retrieved from http://knol.google.com/k/the-marketing-concept-kotler Thompson, J and Martin, F. (2005) Strategic Management 5e: Thompson. 25 – 28. London (Biz-Ed) Wiley, 2009, ‘Scope of Strategic Marketing’, Accessed on 14th November 2009, Retrieved from http://media.wiley.com/product_data/excerpt/51/04708498/0470849851.pdf Wilson, R. and Gilligan, C. (2003) Strategic Marketing Management: Planning, Implementation and Control. Butterworth Heinemann. 25 - 26 Oxford (e-book) Whittaker, L, (2009), How Does a Marketing Plan Affect Overall Strategy?, Accessed on 17th November 2009, Retrieved from http://www.ehow.com/how-does_4565541_marketing-plan-affect-overall-strategy.html Appendix Appendix 1: The core concept of marketing can be easily understood from the below figure: Figure: Core Concepts of Marketing (Wiley, 2009) Read More