Firstly, in order to help you understand fully about marketing, we've wrote a review about "what is marketing" which basically consist of general knowledge and information about marketing. Hopefully, through this review, you will find the excitement about the marketing knowledge as much as we do.
1. MARKETING
1.1 Definition
Marketing can be defined as defined Marketing as “a mediated activity occurring within the economic sphere that employs strategies intentionally rendered and goal-directed towards the exchange of goods and services” (Kurzbard and Sordow, 2001, p.42). It is the process of planning and organizing companies' activities such as pricing, promotion and distributing goods and services, in order to create exchanges that will fulfill both customers’ satisfaction and company’s objective.
1.2 Core Concepts of Marketing
There are ten core components that can explain further the definition of marketing. The first and most fundamental concept underlying marketing is that of human needs. Then it is followed by other concepts such as wants, demands, products, customer value, customer satisfaction, exchange, transaction, relationship marketing and markets (Kotler et al, 2001, p.7).
According to Keegan, Moriarty, Duncan, (1992, p.15), needs can be defined as a feeling that something which is necessary is missing. For example, when a person is thirsty, he/she needs to drink. In contrast, wants is defined as “the manner in which individuals seek to satisfy a need” (Keegan et al, 1992, p.16). For example, a person is looking for a can of soft drink to reduce his/her thirst. Moreover, demand is defined by (Kotler et al, 2001, p.7) as “human wants that are backed by buying power.” For example, in order to get the soft drink, he/she got to spent few dollars for it.
After identifying consumers’ needs; marketers then starts to design good products and services in order to satisfy the consumer's wants and demands. According to Lamb, Hair, and McDaniel, (1998, p.280), product is everything, both favourable and unfavourable, that a person receives in an exchange. The next step is to set prices for the products, promote them, and then deliver them to the markets. Finally, transaction between the consumers and the sellers will take place and that is when customer value and customer satisfaction come about. These ten basic elements bring full circle to the concept of marketing (Kotler et al, 2001, p.7).
2. EVOLUTION
The way business use their strategy in order to sells their product is a critical factor in business selling activity. Until now, there are five different orientations in which organizations may use to sell their product. These orientations are production concept, selling concept, product concept, marketing concept, and societal marketing concept. (Kotler et al, 2001, p.15).
2.1 Production Concept
In the 1850’s, most firms had a production orientation. It is where the main concern was to produce as much as possible, with the most efficient way (Houston, 1986, p.85). It happens because in this era, the amount of demand is more than the amount of supply. Therefore, firms are trying to find the most efficient way to produce a product in the large scale. A classic example is the Ford motor company. Henry Ford's only aim was to perfect the production of Model-T automobile so that its cost could be brought down to the point at which most people could afford it. This concept is not fit in the financial service company since for a company who are providing services; it is impossible to provide a greater number of services than it is demanded.
2.2 Selling Concept
During economic recessions in 1930’s, many people lose their job. This conditions affecting the amount of demand, which is falling down. Because of these situations, companies also suffer since they cannot make any profit out of their product. In order to survive, many company starts to do hard selling. (La Londe and Morrison, 1987, p.2) According to McColl-Kennedy and Kiel, (2000, p.48), selling concept are characterized as "firms aggressively use promotional tools, such as advertising and salespeople, to convince the customer to purchase the firm's products, regardless of whether the customer wants or needs the products.” This concept is still can be used until now, especially for the unsought product, such as insurance, and encyclopaedia. In a financial service company, hard selling strategy is often necessary; it has been shown by some Bank’s promotional strategy, where they usually call their customers and tries to convince them about the Bank’s new services.
2.3 Product Concept
Product concept holds the idea that consumers will favour products that offer the most quality, performance and innovative features, and that an organization should make continuous product improvements. (Kotler et al, 2001, p.17). For example, Sony; from the first time Sony was established in 1940’s, they are improving their product quality and succeed in selling their inventions such as walkman, and compact disk (CD). (Sony, 2005) These product improvements were derived from the growth of the technology rather than based on consumer demand.
2.4 Marketing Concept
Marketing Concepts holds that the key to achieving organisational goals is to determine the needs, and wants of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (McColl-Kennedy and Kiel, 2000, p.50). Many companies have successfully adapted this concept. For example, a bank such as ANZ is putting their ATM machine anywhere, in order to help their consumer to do the quick transaction without to go to the bank.
2.5 Societal Marketing Concept
Societal Marketing Concept holds the idea that "an organization should determine the needs, wants and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer's and society's well-being" (Kotler et al, 2001, p.20). For example, McDonald’s take a “total life cycle” approach to solid waste which means that they consider the environmental impacts of the materials they use from initial selection, through production and transport, to use and disposal, including potentials for reuse and recycling. (McDonald’s, 2004).
3. CONTEMPORARY MARKETING
In these days, many organizations are customers focused and heavily committed to marketing. (Kotler et al, 2001, p.4). In order to survive in the market, businesses have to start thinking about the consumer demand, and trying to fulfill the demand with the right amount of supply. To be able to do this, businesses have to use the marketing orientation as their business orientation. Meanwhile, people also start to concern about the environment. They prefer to buy product that is environmental friendly. (Kama, Hansen, Juslin, 2003, p.847). Therefore, organizations are being called to be socially and environmentally responsible for every action they do.
4. ROLE OF MARKETING IN ORGANISATIONS
The role of marketing was primarily to make sure that the maximum amount of products was sold. This was achieved by the use of advertisements and commercial messages to communicate the value of particular products. Eventually marketing was "a slave function to production and seen as receiving goods produced and having to ensure that they were sold" (Gabbot, 2003, p.83). In today's market environment, it is hard to get consumers to buy a product once. Therefore, marketers are focused on achieving customer loyalty. In order to gain this, organizations have to understand their customers and provide them with a variety of certain benefits.
4.1 Marketing's Role in Strategic Planning
The main purpose of strategic planning is to help companies understand how they can compete for the future. Marketing plays a major role in a company's strategic planning in many ways. First of all, marketing concept, suggests that a company's strategy should revolve around serving the needs of specific group of consumers. Secondly, marketing helps strategic planners to identify attractive market opportunities and evaluate the company's potential to take advantage of them. Lastly, marketing designs strategies for reaching individual business unit's objectives (Kotler et al, 2001, p.36).
4.2 Marketing Research
Marketing research can be defined as the function that links an organization to its market through information (McColl-Kennedy and Kiel, 2000, p.96). Most organizations rely upon their marketing department to develop some research in order to determine the response of the target market to new products, new competitors or new economic conditions (Gabbott, 2003, p.86).
Consumer buying behaviour can be defined as "the behaviour that consumers display in seeking, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their personal needs" (Schiffman, Bednall, Cowley, O’Cass, Watson, Kanuk, 2001, p.5). According to Kotler et al, p.211), There are four types of buying decisions. The first one is complex buying behaviour, where consumers are highly involved in purchasing the products because of high-perceived difference between brands. This kind of product is usually expensive and purchased infrequently, for example: car, house, and washing machine. The second type of buying behaviour is dissonance reducing behaviour. It is when consumers are highly involved in purchasing process and there are few perceived differences between brands. The product is usually expensive and purchased infrequently, for example: carpet.
The third type is the habitual buying behaviour. This is where the customers have low involvement in the purchasing process because there is a low perceived difference between brands and products are purchased frequently. For example: salt, pepper, and tomato sauce. Lastly, the variety-seeking buying behaviour is when there is a low consumer involvement. The product has significant brand differences and purchased frequently, for example: biscuits; since consumer might buy a different brand of biscuits, because of boredom or simply want to try something new.
In purchasing financial service, such as opening bank account, Consumers usually experiencing dissonance-reducing behaviour. This happens because there is not much difference between proposals given by banks. It usually require a high involvement of the people, yet it is purchased infrequently.
5.3 Market Segmentation
Market segmentation is a process of dividing the total market into groups with relatively similar needs and wants in order to design an offer of value that matches those needs and wants. (Gabbott, 2003, p.87). Most markets seem to comprise multiple products and brands. These products and brands are often owned or produced by the same company. For example, a bank got a product for the student, adults, and retirement. Each product is carefully designed to appeal to a certain segment of the market.
In order to segment a market, a company has to try different segmentation variables to find the best way to view the market structure. There are four major variables that might be used in segmenting consumer markets. The first one is geographic segmentation where the market is divided into different geographical unit such as nations, regions and states. The next one is demographic segmentation where the market is divided into groups based on variables such as age, gender and income. This two is the most popular type of segmentation (Kotler et al, 2001, p. 66).
The third variable is psychographic segmentation. Buyers are divided into different groups based on status, lifestyle or personality characteristics. The last variable would be behavioural segmentation, where buyers are divided into groups based on their knowledge of the product, their attitude towards it, the way they use it and their responses to it (Kotler et al, 2001, p. 67).
4.4 Market Targeting
Once the organization has segmented the market, organization may start targeting the market. It enables the organization to minimize their target market and concentrates to sell the product to the market that has a need or want for it.
In evaluating market segments, the firm must look at some factors, such as the attractiveness and the growth potential of the current market segments, the ability to attract a larger percentage of the market, and Lastly, to make sure that the objectives and resources of the company are aligned with the customers.
A financial services company needs to segment its market, since financial services is a type of product which is very specific. In order to gain customers, they have to target the potential market and concentrate in promoting, advertising, and selling in that market.
4.5 Market Positioning
After deciding which market segments to enter, organization has to decide which position the firm wishes to have in those segments. Market positioning can be defined as "Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target consumers; formulating competitive positioning for a product and a detailed marketing mix" (Kotler et al, 2001, p.68).
4.6 Marketing Mix
Marketing mix is one of the major concepts in contemporary marketing. It can be defined as “a unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market” (Lamb et al, 1998, p.39). It consists of four variables, which are called the 4Ps; product, price, place and promotion.
Product is a bundle of tangible and intangible attributes that a seller offers to the potential buyer and that satisfies the buyer's need or wants (McColl-Kennedy and Kiel, 2000, p.75). Consumer products are products that are purchased by individuals for their personal consumption and it can be classified into four main categories; convenience products, shopping products, specialty products and unsought products (Kotler et al, 2001, p.337).
Price can be defined as the amount of money customers have to pay to obtain the product (Kotler et al, 2001, p. 414). Pricing requires the marketing manager to make complex decisions, such as developing an overall price strategy, setting price objectives and price tactics as well as decide whether to raise or lower prices.
Promotion is a form of communication adopted by marketers in an attempt to inform, persuade and influence possible buyers of a product in order to obtain a response (McColl-Kennedy and Kiel, 2000, p. 88). For financial services company such as bank, there is different kind of promotional tools that has been used in order to attract potential buyers. These tools include advertising, personal selling, public relations, sales promotions and direct marketing.
Distribution or place is essential to marketing decision-making as the final consumer and manufacturer are usually separated by physical distances. Distribution or place can be defined as the marketing channel used and the physical delivery or logistics of getting a product to market. The most common marketing channel consists of manufacturers, wholesalers and retailers (McColl-Kennedy and Kiel, 2000, p.104). In financial services company such as bank, place is very important. In order to attract customer, bank also use their advantage in place. For example, some bank have ATM machine distributed in almost everywhere. It is to make their customer’s activity become easier. It also could attract people to join and use their services.
5. THE IMPORTANCE OF MARKETING
Nowadays, marketing plays a significant role in all kinds of organizations because it helps companies to compete and survive in the dynamic business environment. Every organization needs marketing as guidance when segmenting a target market for its products, so that they can allocate their resources effectively and efficiently. Furthermore, marketing mix give assistance to organizations in manufacturing the products, how to set prices on them, where to distribute them and which promotional tools the organization can use to attract potential buyers (Reed, 1999, p.10).
The role of marketing is essential for financial services firm as it helps them to target the right market segments for their products. Therefore, firms will eventually survive in the market, and obtaining high sales and maximum profits through the use of marketing.
6. REFERENCE LIST
o Kurzbard, G., & Soldow, G., (2001) “Towards a Parametric Definition of Marketing” in European Journal of Marketing, August, p.37.
o Kotler, P., Brown, L., Adam, S., Armstrong, G., (2001), Marketing, Prentice Hall, Australia.
o Keegan, W., Moriarty, S., Duncan, R., (1992), Marketing, Prentice Hall, USA.
o Lamb, W.C., Hair, J.F., McDaniel, C., (1998), Marketing, International Thomson Publishing, USA.
o Houston, F.S. (1986), "The Marketing Concept: What It Is and What It Is Not" in Journal of Marketing, May, p. 85.
o McColl-Kennedy, J.R., Kiel, G.C. (2000) Marketing: A Strategic Approach, Nelson Thompson Learning, Australia.
o La Londe, B.J., Morrison, E.J., (1967) “Marketing Management Concepts Yesterday and Today” in Journal of Marketing, January, p.2.
o Sony, Corporate History, http://www.sony.net/SonyInfo/CorporateInfo/History /history.html, (2 May, 2005).
o McDonald’s, Waste Management, http://www.mcdonalds.com/corp/values/socialrespons/enviroment/waste_management.html
o Kama, J., Hansen, E., Juslin, H., (2003) “Social Responsibility in Environmental Marketing Plan” in European Journal of Marketing, June, p.847.
o Gabbott, M. (2003) Introduction to Marketing, Pearson Education, NSW, Australia.
o Schiffman, L., Bednall, D., Cowley, E., O’Cass, A., Watson, J., Kanuk, L., (2001) Consumer Behaviour, Prentice Hall, Australia.
o Reed, P. (1999) Marketing Planning and Strategy, Harcourt, Sydney, Australia.
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