Sunday, July 21, 2019

Contemporary approaches to marketing

Contemporary approaches to marketing Introduction Addressing the above topic, this essay aims to bring out the main points regarding the applicability of the marketing mix in the contemporary marketing world. To start with the evolution of marketing and marketing management concept is spoken about, moving on to explaining the marketing mix theory, its drawbacks and the evolution of services marketing leading to a new marketing approach i.e. relationship marketing. Then an evaluation between the two approaches has been undertaken to conclude by emphasizing the importance of the prevailing approach as well as the new approach. The very initial study of marketing emphasized on the allocation and trading of commodities and manufactured goods and found its basics in economics (Marshall 1927 as cited in Vargo, Lusch 2004). Attention was focussed on commodities exchange, the establishment which made goods available and arranged for handing over control of the goods, and the basic functions that were required to help in the exchange transactions (Vargo and Lusch 2004). The study of managerial marketing developed in the early 1950s. During this time managerial theorists defined marketing management as a process of decision making or problem-solving. This approach emerged out of the traditional sales approach and became a broadly accepted function of business stressing on the basics like product planning and developing, pricing, promoting and distributing (Webster, Jr. 1992). These fundamental functions, to supply goods to final consumers and satisfy their needs formed the marketing mix. Evolution and concept of marketing mix The concept of marketing mix was set up in 1960 by McCarthy and the mix of factors was labelled as the four Ps. As defined by Kotler in his book Marketing Management, Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. McCarthy classified these tools into four broad groups: Product, price, place, promotion (Kotler 2000 p.15). The four Ps symbolise the outlook of the sellers. Robert Lauterborn (1990) recommended four Cs, customer solution, customer cost, convenience, communication, from the customers view to which each P would convey a specific benefit. The theoretical value of the Mix is also underlined by the widely held view that the framework constitutes one of the pillars of the influential Managerial School of Marketing (Kotler 1967; Sheth et al. 1988 as cited in Constantinides 2006). The importance of this tool can be understood by the above statement. The concept of the marketing mix being easy to understand, practice and teach, positioned itself to become the unchallenged universal marketing model and much of further marketing studies evolved with this concept as their basis, making a tremendous impact on the practical world. Drawbacks of the Four Ps Theory On the flip side, the marketing mix approach is based on typical situations which do not fit well in other markets. It was basically formulated for the North American milieu, with packaged goods, aggressive distribution, strong media presence and huge markets, consumers just becoming numbers for marketers, and not presenting an actual situation (Gronroos 1994). Van Waterschoot and Bulte (1992 p.85) also brought out three defects in the Four P model; The properties or characteristics that are the basis for classification have not been identified. The categories are not mutually exclusive. There is a catch-all subcategory that is continually growing. Another disadvantage is that the marketing mix is production oriented, i.e., it focuses on the product and not on the consumer who is the actual end user (Gronroos 1994). For example if Nokia makes a mobile which is very heavy, slow, and does not have the latest features that consumers require, all marketing strategies based on the four Ps , product, price, place, promotion would fail to sell the product, since it is not what the customers want. Here comes in the need for newer marketing approaches, focussing on the needs and wants of customers. A major disadvantage of this approach is that there is no interrelation between the 4 variables of the mix. Every variable or P has a separate working department and plan with no coordination (Yudelson 1999). Not just that, this approach alienates the rest of the organisation from the marketing aspect, and thus distances them from the voice of the customer (Gronroos 1994). Goods to Service dominant logic Over these years there has been a shift from a goods dominated economy to a services, skills, knowledge and processes economy (Vargo and Lusch). As a consequence, the ways in which businesses are carried on and maintained have changed drastically and gradually alongside, various other marketing theories have evolved. From the functional view of marketing mix management our focus has extended to the strategic role of marketing, aspects of service marketing, political dimensions of channel management, interactions in industrial networks; to mention just a few evolving trends (Moller 1992 as cited in Gronroos 1994 p. 7; Constantinides). Service Marketing These changes have also led to a growth in competition. To deal with this, it is essential to recognize the importance of services which can be offered with the core product to add extra value to it and result in competitive advantage (Gronroos 2007). Service marketing grew out of this need. As defined by Gronroos in his book, service marketing is to make customers use the service processes and implement these processes in a way that makes customers perceive that value is created in their processes (p.55). Firms with a service orientation have to centre their attention to the relation with their consumers and other stakeholders. For example, United Airlines throws parties for their privileged customers, where they are informed about the airlines forthcoming services (Holbrook and Hulbert 2002). With growth in service, three supplementary Ps, people, physical evidence and process have also been put forward (Booms and Bitner 1982 as cited in Gronroos 2002) to address customer needs bet ter. Relationship Marketing Therefore, relationship marketing has grown to become a requirement for achieving success in a service market, and a concentration on customer relationship and customer retention has become a crucial need (Gronroos 2007). Marketing is to establish, maintain, and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfilment of promises. This is the definition of relationship marketing (Gronroos 1994 p.9). Though relationship marketing is in its early years as a conventional marketing paradigm, its significance can be identified to great degree. On the basis of marketing dimensions, relationship marketing encompasses Database marketing, Interaction marketing and Network marketing. Coviello in his journal says, that relationship marketing does not conform only to industrial and service marketing, it relates to all firms including packaged good firms, since it is imperativ e to maintain customer relations in other firms as well (Coviello et al. 1997). The consequence of relationship marketing is that by creating a long-term relationship, two individuals or companies with time discover, understand and conform to the others need better and this eventually benefits both. Marketing Mix vs Relationship Marketing To understand the changing business environment as well as the probable marketing strategies, Gronroos created a continuum, where transaction marketing is positioned on one end and relational marketing on the other end. The main point of difference between the two approaches is that where relationship marketing spotlights on maintaining relations with customers, over a long time period, transaction marketing deals with a single exchange covering a shorter time frame (Gronroos 1994). Therefore it can be said that not in all situations but, generally packaged good businesses will gain from a transaction approach since it is a one-time effort and revolves around a single transaction. On the other hand service based businesses will gain maximum from a relationship approach, since their business revolves around providing services which are continually needed. Examples of relationship marketing based companies are Dell and Apple, who manufacture customised computers and laptops. Changed meaning of the Marketing Mix variables As spoken about above, there has been a dominant shift from goods to a service economy. Earlier the main aim of an organisation was to sell a product to satisfy the needs of the consumers and to make profit. But now, it is not about the product that is provided, rather it is about the total value or utility that it provides to the consumer (Vargo and Lusch). As it is correctly said, the true essence of the customer-centricity paradigm lies not in how to sell products but rather on creating value for the customer and, in the process, creating value for the firm (Boulding et al. 2005 as cited in Shah et al. 2006 p.115). For example, a mobile phone with the latest features would not be of much use to a person who does not know how to use those feature and would provide the same utility as that of an older version. Thus, augmenting the product is not enough, further service such as tutorials in order to help understand the features are required. When the traditional theory was formed, the marketing mix focussed on just the core product and thus price-sensitivity was a major issue. Now with services marketing evolving the value of the product/service is perceived based on the overall value created. Thus for consumers now price is not as sensitive an issue as it used to be (Gronroos 1994). In earlier times place was an important deciding factor for the sale of a product, since transport and communication were difficult. But in the present, with development of such networks, we are globally connected, through mediums such as internet, mobile phones, etc. Even business transactions are now carried on the internet, thus the place factor which forms a part of the marketing mix has now become less relevant. For, example to shop for a Gucci bag earlier we had to go to the store, and it location mattered but now we can purchase and pay for it on the internet, regardless of where the store is situated. Thus, Process is a better label for this essential component of the marketing mix (Yudelson 1999). A relationship marketing approach helps firms to setup a real-time database system which would provide updated information about its clients and their levels of contentment for the products or services provided (Gronroos 1994). To get such extensive information in the marketing mix approach is not possible since the marketers of such organisations dont directly connect with the customers; instead they rely on heavy promotion to sell the products. But in the present times promotion comes second to serving the needs and wants of the customers. Conclusion Practically 40 years later, since the time the Marketing Mix concept emerged in 1960, marketing scholars are pondering over the sufficiency of this marketing approach. There have been rapid changes in business operations due to change in technology and globalisation and it can be said that transactional marketing alone cannot keep up with this transformation. Nevertheless it is evident that no adequate replacement has been known for the marketing mix approach. With the developments in marketing, McCarthys Four P theory must be reviewed to help build on the previous theory and leap to the future. Flexibility, not insurrection or revolt is the best way to come to terms with the changes. The benefit of making changes in the existing thought rather than creating a completely new notion is the fact that the Marketing mix paradigm concentrates on the basics of marketing. Thus any new evolving marketing theory must take into account these basics. Relationship Marketing although is a new eme rging paradigm but it cannot function without the basics of the 4 Ps or the marketing mix, since only maintaining relations is enough for a business to flourish. Once the product and its pricing, placing and promotion strategies are developed, maintaining relations to retain the customer is the spot on approach. Therefore, keeping marketing mix approach as the base, relationship marketing or any other contemporary approach must be applied for achieving the best results. References Constantinides, E. (2006), The Marketing Mix Revisited: Towards the 21st Century Marketing, Journal of Marketing, Vol.22, pp. 407-438. Coviello, E. N., Brodie, J. R., Munro, J. H. (1997), Understanding Contemporary Marketing: Development of a Classification Scheme, Journal of Marketing Management, Vol.13, pp. 501-522. Gronroos, C. (1994), From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in Marketing, Management Decision, MCB University Press Limited, Vol.32 (2), pp. 4-20. Gronroos, C., Service Management and Marketing, Third Edition, John Wiley and Sons, Ltd. pp.1-22, 51-70. Gronroos, C. (2002), Marketing? Toward a Relationship Marketing Paradigm, The Marketing Review, Swedish School of Economics and Business Administration, Vol. 3, pp.129-146. Holbrook, B. M., Hulbert, M. J. (2002), Elegy on the Death of Marketing, European Journal of Marketing, Vol. 36 (5/6), pp.706-744. Kotler, P., Marketing Management, Millenium Edition, Prentice Hall International, Inc. pp.1-32. Lauterborn, R. (1990), New Marketing Litany: 4 Ps Passe; C Words Take Over, Advertising Age, Crain Communications, Inc. pp.26. Shah, D., Rust, T. R., Parasuraman, A., Staelin, R., and Day, S. G., (2006), Path to Customer Centricity, Journal of Service Research, Vol. 9, pp 113-124. Van Waterschoot, W., Van den Bulte, C. (1992), The 4P Classification of the Marketing Mix Revisited, Journal of Marketing, Vol. 56, pp.83-93. Vargo, L. S., Lusch, F. R. (2004), Evolving to a New Dominant Logic for Marketing, Journal of Marketing, Vol. 68, pp.1-17. Webster, F. E., Jr. (1992), The Changing Role of Marketing in the Corporation, Journal of Marketing, American Marketing Association, Vol. 56 (4), pp.1-17. Yudelson, J. (1999), Adapting Mccarthys Four Ps for the Twenty-First Century, Journal of Marketing Education, Sage Publishers, Vol.21 (60), pp. 60-67.

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